This amounts to more than 2 percent of GDP.
A World Bank study has found that South Asian governments spent more money on fuel subsidies, than they are spending on either heath or education.
In 2004 Sri Lanka’s government, abandoned automatic fuel price adjustments and printed money to the equivalent of 3 percent of GDP, to subsidize a range of imported commodities including oil and fertilizer under a new home-grown economic policy framework, which was aimed at insulating the country from world market prices.
The use of excessive central bank credit promptly pushed year-on-year consumer inflation up to 18 percent and plunged the country into a balance of payments crisis.
The World Bank has found that in many South