Sri Lanka fulfills requirements of IMF in hope of financial assistance
2023.02.16 03:52
Sri Lanka fulfills requirements of IMF in hope of financial assistance
By Tiffany Smith
Budrigannews.com – Sri Lanka raised electricity prices by 66% on Thursday in an effort to convince the International Monetary Fund to provide immediate assistance to the country’s struggling economy.
The magnitude of the price increase will wreak havoc on Sri Lankans already struggling with 54.2% inflation. However, due to a lack of foreign currency reserves, the government is unable to afford essential imports and must demonstrate to international creditors that it will adhere to sound fiscal practices.
Energy Minister Kanchana Wijesekera told reporters, “We know that this will be hard on the public, especially the poor, but Sri Lanka is caught in a financial crisis and we have no choice but to move toward cost reflective pricing.”
“We hope that Sri Lanka has moved closer to receiving the IMF program with this step.”
A representative of the Ceylon Electricity Board confirmed the magnitude of the price increase.
Wijesekera stated that he hoped to reduce tariffs by July, when the government plans to revise prices once more. However, he did not specify by how much the prices would rise.
In order to obtain the $2.9 billion IMF loan that was agreed upon in September, Sri Lanka must address its massive public debt in the midst of its worst financial crisis in seven decades.
According to Wijesekera, the price increase would assist the government in better managing its long-term fuel contracts and help the power ministry fill the void left by the cessation of government subsidies.
Last year, thousands of people took over the former President’s official residence and office as a result of massive protests against economic mismanagement.
President Ranil Wickremesinghe has desperately sought assistance from international creditors, particularly the IMF, since taking office in July.
