While consumers and markets cheer the fall in fuel prices as a budget proposal, the government is seriously considering defaulting on the costly payment under the controversial oil hedging deal with Standard Chartered Bank – because the Ceylon Petroleum Corporation (CPC) can’t afford it anymore, informed sources said.
The current financial crisis which is brewing into a world economic recession is not caused by oil and food crisis as such, though it has sped up the intensity of the current crisis. It is too soon to expect the oil and food crisis to deteriorate into an economic recession as its supply side impact may take more time to materialize. Once it does, it will further exacerbate the current crisis creating a spiralling cascading effect of economic deceleration. Hence, short term economic prospects look very gloomy.
