Sri Lanka under IMF grip, raises power prices again
2 Min Read
The debt-ridden country, which is on the verge of economic collapse, has been facing a political crisis and is struggling with deteriorating social issues and security.
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Demonstrators protest inside the Presidential Secretariat premises, in Colombo, Sri Lanka, July 9, 2022. (Reuters)
Officials reported Thursday that Sri Lanka's energy board raised customer prices by up to 275%, the second high increase in months as the insolvent island nation seeks an IMF deal.
Sri Lanka suffered from an unprecedented financial crisis last year as 22 million people endured months of food and fuel shortages, along with lengthy power cuts.
The people of #SriLanka are suffering amid a crippling economic crisis that has been accumulating for more than a decade.#srilankacrisis pic.twitter.com/oqsMLAm1pZ
— Al Mayadeen English (@MayadeenEnglish) March 16, 2022
The government has defaulted on its $46 billion foreign debt and is negotiating a bailout deal with the International Monetary Fund to allegedly repair its shattered finances.
"We had to raise electricity charges to be in line with IMF conditions that we cannot get handouts from the treasury," Energy Minister Kanchana Wijesekera told reporters.
"We need to generate revenues to cover our costs," he added.
Electricity will now cost at least 30 rupees (eight cents) per kilowatt-hour. Meanwhile, the 275% increase in the lowest rate comes six months after a 264% increase.
Larger users' prices have been raised by 60%, following an increase of 80% in August.
Wijesekera claimed that the tariff hikes would allow Sri Lanka's state electricity monopoly to halt the 140-minute daily blackouts now in force over the island.
"With increased revenue, we will be able to buy the fuel necessary to ensure uninterrupted power from today," he said.
It is worth noting that Sri Lanka suffered from daily blackouts of up to 13 hours last year as utilities ran out of money to buy imported fuel for generators.
Months of protests during the height of the crisis pushed then-President Gotabaya Rajapaksa to depart the country and resign in July following allegations of economic mismanagement and corruption.
His successor, Ranil Wickremesinghe, has negotiated with international creditors and imposed tax hikes "to smooth passage of the IMF bailout."
Wickremesinghe predicted that Sri Lanka's economy will collapse by up to 11% last year and that the country would likely stay insolvent until at least 2026.
According to the UN Children's Agency, approximately one-third of Sri Lankans require humanitarian assistance as a result of the crisis.
