Sri Lanka raises fuel prices amid soaring global commodity prices

Sri Lanka has hiked fuel prices by more than 40% after a currency float pushed the local rupee to record highs and amid a surge in global commodity prices.

The Ceylon Petroleum Corp raised the price per liter of gasoline to 254 rupees ($1) from 177 rupees, and diesel to 176 rupees per liter from 121 rupees. The changes come into effect on Saturday.

Sri Lanka was already struggling with the highest inflation rate in Asia before the war in Russia added to its woes. The country is facing food and fuel shortages amid a tightening dollar, with queues outside gas stations and power outages of up to seven hours in some parts of the island.

Separately, the Central Bank of Sri Lanka, in a notice on Friday evening, said foreign earnings from exported goods and services provided overseas must be paid within 180 days. The authorities have taken a series of measures, including a devaluation of the currency, import restrictions and an increase in key rates, considered to create the conditions for opting for a bailout by the International Monetary Fund.

The country has about $2 billion in foreign exchange reserves against total debt repayment of up to $7 billion for 2022. This includes a $1 billion bond maturing in July.

Yields on Sri Lanka’s weekly 91-day treasury bill auctions rose nearly 100 basis points on March 9, signaling that the monetary authority may raise borrowing costs further.

Updated: March 13, 2022, 03:30

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