Treasury Secretary says tsunami reconstruction over the medium term will be inflation neutral but humanitarian efforts will get priority now even if it affects prices. Treasury Secretary says tsunami reconstruction over the medium term will be inflation neutral but humanitarian efforts will get priority now even if it affects prices. Dr. P B Jayasundera says labor and material shortages for reconstruction could cause macro imbalances over the short term, but added that inflation will be neutral over the full Tsunami reconstruction period of about three to four years.
Government last week said they would keep the medium term fiscal plan announced in the budget on track despite the higher than expected deficit that is now going to be donor funded.
Early statements that reconstruction will be completed in one year have given way to ones that seek to do the reconstruction over the medium term.
“The debt relief already earmarked for debt servicing can either be used to domestic public investment or to reduce any other expenditure of the three year program. The issue is not financial but of labor and material,” says P B. Jayasundera.
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