COLOMBO: Cash-strapped Sri Lanka on Wednesday announced a 15 percent increase in the electricity price to shore up revenues for the state-run utility, in line with conditions imposed by an IMF bailout.
The Public Utilities Commission said it allowed the Ceylon Electricity Board (CEB) to charge the higher rates from Thursday, six months after a controversial reduction that pushed the utility into the red.
The government had forced a 20 percent price cut on the CEB in January, despite fears that it would cause the government-owned company to lose money and undermine the national budget.
Ensuring cost-recovery and doing away with subsidies is in line with the conditions set by the International Monetary Fund, which granted a four-year, $2.9 billion loan to help salvage Sri Lanka’s economy.
The country had declared bankruptcy after defaulting on its $46 billion foreign debt in April 2022, having run out of foreign exchange to finance even the most essential imports, such as food, fuel and medicines.
Months of protests over shortages led to the toppling of then-president Gotabaya Rajapaksa in July 2022.
His successor, Ranil Wickremesinghe, secured the IMF bailout and proceeded to cut subsidies and raise taxes.
Wickremesinghe lost the September election, but his successor, Anura Kumara Dissanayake, is pushing ahead with the IMF-backed reforms.
Inflation, which peaked at nearly 70 percent in September 2022, has dropped sharply, and the country has been experiencing deflation since September.
The IMF says Sri Lanka is slowly emerging from its worst meltdown and that the economy has turned around, although risks remain.
