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Economy

Tea leaves for oil -- Sri Lanka struggles with runaway inflation

Island nation's price increases could act as bellwether for global prices

Sri Lanka plans to pay Iran in tea to settle an oil debt.   © Reuters

SINGAPORE -- Economic conditions in Sri Lanka are growing worse. The Sri Lankan rupee has fallen sharply as inflation picks up. Funds have been flowing out of the country, leading to a sharp decline in its international creditworthiness, as with Turkey. The world is becoming increasingly wary of signs of such prolonged inflation, and turbulence in financial markets is already beginning to appear.

"We hope to send $5 million worth of tea each month to repay Iran for oil purchases pending since the last four years," Sri Lankan Plantations Minister Ramesh Pathirana told Reuters on Wednesday, saying he aimed to start sending the tea in January.

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