Sri Lanka could face Balance of Payment crisis if Middle East conflict continues - Economist

Sri Lanka may encounter a 'Balance of Payment' crisis if the conflict in the Middle East persists, warns economist Talal Rafi. In an interview with Ada Derana, Rafi expressed concern that rising global oil prices could continue due to recent attacks on refineries in the region. He pointed out that along with the increase in oil prices, food costs might also rise, contributing to higher global inflation. Rafi stated that Sri Lanka spends approximately US$ 4.5 billion each year on fuel imports, so a 10% increase in prices would significantly affect the government's current account. He stressed that if oil prices reach US$ 100, Sri Lanka is likely to face a 'Balance of Payment' crisis. Furthermore, Rafi highlighted that the ongoing conflict could negatively influence remittances and earnings from tourism in Sri Lanka. He warned that while the current situation is already affecting the economy, a prolonged conflict would have severe consequences.