May 24, 2022 02:37AM ET
By: AnalysisWatch
Sri Lanka raised fuel prices Tuesday in a long-heralded move to shore up public finances and combat a crippling economic crisis.
Effective immediately, Minister of Power and Energy Kanchana Wijesekera announced in a message on Twitter that gasoline prices will increase by 20–24% and diesel prices by 35–38%. The daily maximum amount that each consumer can buy will be maintained.
According to economic experts, the price increases for fuel and transportation will inevitably affect food and other goods.
Annual inflation in the island nation rose to a record 33.8% in April from 21.5% in March, according to government data released Monday.
Sri Lanka is facing its worst economic crisis since independence in 1948 as an acute shortage of foreign currency has brought imports to a halt and the country is struggling with shortages of fuel and medicine as well as constant power outages.
The financial difficulties are due to a confluence of the COVID-19 pandemic, which is rocking the tourism-dependent economy, rising oil prices and populist tax cuts by the government of President Gotabaya Rajapaksa and his brother Mahinda, who resigned as prime minister this month.
However, in other countries, including neighboring India, hybrid work models have led to an increase in electricity consumption.
Economists said the increase in fuel and electricity prices was necessary to close the massive gap in Sri Lanka's government revenues, but acknowledged it would be painful in the short term.
There were no immediate reports of protests or unrest following Tuesday's price hikes.
The Sri Lankan navy said Tuesday it had apprehended 67 people trying to flee the country illegally from the northeast co
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