Sri Lanka’s electricity prices rose by 66% on Thursday, as announced by Power and Energy Minister Kanchana Wijesekera on Thursday. As part of this action, the government expects to persuade the International Monetary Fund (IMF) to send urgent assistance to Sri Lanka’s crisis economy.
The hike comes after the government boosted electricity costs by 75% last year, adding to the misery of Sri Lankans who are already dealing with inflation of more than 54% year on year in January and income taxes as high as 36%.
The power and energy minister said that the government knew this action would be hard for everyone, especially the poor, but the country was faced with a financial crisis and had no choice but to move toward cost-reflective pricing. Hopefully, Sri Lanka could move closer to the IMF program.
In September, the IMF agreed to loan Sri Lanka $2.9 billion to help it recover from its worst financial crisis in seven decades. However, in exchange for the loan, Sri Lanka must implement a number of reforms, including increasing tax revenue, removing subsidies, and reducing public sector debt.
Wijesekera expects to reduce tariffs by July, when the government plans to adjust the price again.