Petrol Crosses Rs 303 In Sri Lanka Due To Unprecedented Inflation; Currency Depreciates By 30% Against Dollar
One of Sri Lanka’s biggest fuel suppliers has raised the price of petrol by approximately 20%, the second increase in as many weeks, as the country struggles to import oil without dollars.
Lanka IOC increased petrol prices
Lanka IOC, a fuel retailer which accounts for a third of the market, on Saturday said the company is increasing the petrol price to 303 rupees (just above $1) a litre, up from 254 rupees.
Two weeks ago, the company raised the rate of petrol by 25%. The company said the 30% decline of the rupee in comparison with the US dollar and other crucial currencies this month fuelled the increase.
There had not been an immediate price revision from the state-owned Ceylon Petroleum Corporation but its representatives, who have asked to stay anonymous, said it was almost certain to follow the Lanka IOC.
Sri Lanka’s huge economic crisis
Sri Lanka is facing its worst economic crisis since the company’s independence from Britain in 1948. Sri Lanka’s foreign reserves have hit an all time low. Commercial banks have not been able to secure dollars to finance imports of food, fuel and medicines. Approximately four people died waiting in long queues to buy fuel last week.
Sri Lanka had been in a huge economic crisis when the COVID-19 pandemic hit, reducing foreign worker remittances and impairing the profitable tourism sector which has been a crucial source of dollars for the economy. The government implemented a broad import ban in March 2020 with the aim of saving foreign currency.
Sri Lanka is facing inflation
The shortages have raised food prices up by 25% last month, with overall inflation at 17.5% which was the fifth consecutive monthly record high. Sri Lanka is also facing five-hour rolling electricity blackouts because the thermal generators are all out of oil.
Three international rating agencies have demoted the island since late last year with fears that the country may not be able to handle its $51bn sovereign debt.
Sri Lanka said earlier in this month that the country will pursue an International Monetary Fund bailout and talks are expected to open next month in Washington.