Sri Lanka Increases Power Tariffs to Unlock IMF Funding

In a crucial move to unlock international financial support, Sri Lanka will raise household power tariffs by 15% as announced by the island nation's power regulator. This adjustment is part of the government's strategy to secure the next $2.9 billion installment from the International Monetary Fund (IMF).

The hike will impact various sectors differently, with industries seeing a 20.5% increase and the tourism sector experiencing a 20.2% rise, according to Public Utilities Commission Chairman K.P.L. Chandralal. The revised tariffs take effect immediately, marking a shift from the power price cuts initiated in January by President Anura Kumara Dissanayake's new government.

Initially reduced by 20%, power prices had raised concerns about the state-run Ceylon Electricity Board's ability to recover costs. The increase in tariffs is essential for obtaining the IMF board's approval for a new $344 million tranche. After a severe foreign exchange crisis in 2022, Sri Lanka's economy rebounded more quickly than anticipated, growing by 5% in the aftermath of a March 2023 bailout from the IMF.

(With inputs from agencies.)