 www.tamileelamnews.com TNS Corner Colombo - Standard and Poor's (S&P) credit rating agency painted a gloomy picture on the status of the Sri Lanka’s credit outlook. The country’s credit outlook is to be downgraded to “negative”.
Indonesia and Vietnam also might have their credit ratings down graded unless their governments succeed in curbing inflation and government expenditure, Standard & Poor's (S&P) had said on Monday.
"Rapidly rising food prices are becoming a top concern for many governments, as further erosion of the affordability of staple foods, particularly in low per capita income economies, could lead to social tension and political instability," S&P said.
In the case of Sri Lanka, the ratings agency said persistently high inflation in the country currently at more than 20 percent year-on-year and at a record breaking 29 percent for April required a more forceful policy action by the government to restore price stability.
The inflation of the country sky rocketed to an all-time high of 29 percent in April, value of the rupee continue depreciating significantly against all major world currencies, and the looming bigger and bloodier war threats all are causing great worries to the common man. Sri Lankan government to restore price stability they need more forceful policy action the agency said.
"If there is a military buildup and sharp increase in weapons imports and a deterioration of the rupee, it will have a spiraling effect on inflation," said an analyst in Colombo.
There is gloomy prospects for the Sri Lankan economy and its credit ratings as inflation skyrocketing, rupee’s value depreciating, share prices falling down, fuel prices repeatedly rising, the high interest rates, wide range of corruptions in the government, mismanagement of the public funds, heavy tax increases on goods, the escalation of the violence and more importantly threat of looming bloody war.
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