Sri Lanka increases fuel prices as it seeks to rein in crisis

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Sri Lanka increased fuel and transport prices on Tuesday, a long-flagged move to combat its debilitating economic crisis, but the hikes are bound to exacerbate galloping inflation, at least in the short-term.

Power and Energy Minister Kanchana Wijesekera said in a message on Twitter that petrol prices would increase by 20%-24% while diesel prices would rise by 35%-38% with immediate effect.

“Cabinet also approved the revision of transportation and other service charges accordingly,” he said.

Wijesekera said also that people would be encouraged to work from home “to minimize the use of fuel and to manage the energy crisis” and that public sector officials would work from office only when instructed by the head of the institution.

Food and transport price increases will flow through to food and other goods, economists said.

Annual inflation in the island nation rose to a record 33.8% in April compared to 21.5% in March, according to government data released on Monday.

Sri Lanka is in the throes of its worst economic crisis since independence, as a dire shortage of foreign exchange has stalled imports and left the country short of fuel, medicines and hit by rolling power cuts.

The government has approached the International Monetary Fund for a bailout, and will begin a virtual summit on Monday with IMF officials aimed at securing emergency assistance.

Facing escalating anti-government protests, Rajapaksa’s government last week declared a state of emergency for the second time in five weeks, but public discontent has steadily simmered.

Long queues for cooking gas in recent days have frequently turned into impromptu protests as frustrated consumers blocked roads.

Domestic energy companies said they were running low on stocks of liquid petroleum gas mainly used for cooking.