World bank in its latest country update published states that the Sri Lankan economy will continue to shrink in the coming year expecting a 4.2% contraction
Sri Lanka on Monday sliced its fuel prices, making it the second reduction in many weeks after the World Bank warned about an unmatched economic shrinkage of 9.2 percent this year. World bank in its latest country update published states that the economy will continue to shrink in the coming year expecting a 4.2% contraction.
The price of petrol will be reduced by 40 rupees, reaching 370 rupees ($ 1.02) per liter from Monday night, announced the Energy Ministry. The price of regular petrol, however, is still priced twice the amount prior to the start of the crisis the previous year while the rates of diesel still stay sky high which is three and half times more than what it was in December 2021.
In early 2022, the island saw extensive fuel and food crisis that led to national protests which brought the dethronement of President Gotabaya Rajapaksa, who fled the country temporarily in July. Sri Lanka had an estimated debt of $50 billion and in the month of May, it declared bankruptcy.
Fuel in Sri Lanka is rationed because of the continuing scarcity of dollars that is required to pay for essential imports. The public services are getting on their original track, after a period of standstill due to the lack of diesel, with doubled fares for many services because of soaring prices for other goods and essential services. The latest reduction in the prices of the fuels comes after the warnings of the World Bank on the economic retrenchment which will be worse than the 8.7 percent predicted by Sri Lanka’s Central Bank .
The island’s worst crisis is also blamed on tax cuts announced by the government in the year 2019. The crisis forced the government to default on its foreign debts.
The International Monetary Fund has falteringly approved a $2.9 billion bailout over a period of four years, but the arrangement is subjected to a settlement with China and other creditors mainly to contain corruption and bring down inflation.