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| Sunday, 24 July 2005 |
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Cost of Living would dip - CB by Jayantha Sri Nissanka The Central Bank (CB) of Sri Lanka yesterday predicted that the cost of living would come down in the coming months in the wake of the Government's decision to remove 15% VAT on diesel imports. Diesel is one of the key elements which could increase the prices of essential items and related services on the Sri Lankan economy heaping more burden in the poor masses, according to the CB. World oil prices have topped US dollars 58 to 60 a barrel in the recent past. Director, Economic Research of the CB Dr. H. N. Thenuwara said "Reducing the VAT on diesel prices will help to contain prices. Diesel price has more impact on the economy than other petroleum products" He said that diesel was used for most of the production activities in the country and for transport goods of and services. Therefore, cost of living could come down in the coming months as a result of the removal of VAT, he noted. However, general price level abated last month mainly due to the decrease in food prices. "The removal of VAT will further help to reduce the general price level", Dr.Thenuwara said. Colombo Consumers Price Index (1952=100) dropped to 4019.1 points last month when compared with previous month's 4021.5 points. Finance Minister Dr. Amunugama noted that Government tend to lose Rs.7 billion by removing VAT on diesel and this measure would help maintain a stable price on diesel in the wake of an immediate fuel increase in the World Market. |
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