Insight Bureau: Sri Lanka is grappling with its most devastating economic crisis since independence in 1948, brought about by COVID-19 battering the tourism-reliant economy, rising oil prices, populist tax cuts and a ban on the import of chemical fertilisers, which devastated agriculture.
Sri Lanka has increased fuel and transport prices, 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 on Tuesday that petrol prices would increase by 20-24 percent while diesel prices would rise by 35-38 percent 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 percent in April compared with 21.5 percent 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.
On the other hand, a shortage of medicine caused by an economic crisis in Sri Lanka could soon cause deaths, doctors said, as hospitals are forced to postpone life-saving procedures for their patients because they do not have the necessary drugs.
Sri Lanka imports more than 80% of its medical supplies but with foreign currency reserves running out because of the crisis, essential medications are disappearing from shelves and the healthcare system is close to collapse.
At the 950-bed Apeksha cancer hospital on the outskirts of the commercial capital, Colombo, patients, their loved ones and doctors feel increasingly helpless in the face of the shortages which are forcing the suspension of tests and postponement of procedures including critical surgery.
Indian authorities delivered 25 tonnes of medical supplies, along with other aid, on Sunday, officials said.
“At no time has India assisted any other country to this extent. This is something for which we are deeply grateful,” Sri Lanka’s foreign minister, G.L. Peiris, said at Colombo’s port as he stood by a vessel bringing in thousands of sacks of supplies.