Volatile Price

Dec 24, 2008 (LBO) – The Sri Lanka unit of the Indian Oil Corporation, which slashed petrol prices in response to a Supreme Court order, raised the retail prices back to the earlier level of 122 rupees Wednesday.

The entire capital budget of the government is also financed out of debt, and the government has not been able to even balance its current budget for decades.

The country has weak infrastructure due to years of chronic under-investment, especially in rural areas but the country has more than a 100 ministers out of a total of 225 lawmakers.

The administration of president Mahinda Rajapaksa has not cut taxes as directed in the court order so far, and state-run Ceylon Petroleum Corporation, has also kept its retail price unchanged.

Sri Lanka’s cabinet of ministers had met several times over the issue, but has so far not changed taxes as directed in the court order, in a stand-off between the executive and the judiciary, that analysts say could move towards a constitutional crisis.

Meanwhile Lanka IOC chief Suresh Kumar said his company had cut the price under a court order, but when a new consignment of petrol was brought to the country on Wednesday, the same taxes were charged, forc