Sri Lanka to Slash Power Prices Amid Economic Recovery Efforts

Sri Lanka will cut power prices by 22.5% starting Tuesday to alleviate living costs amid its financial crisis, which drastically shrank the economy. The cuts aim to rejuvenate the economy and adhere to IMF bailout conditions, potentially assisting with inflation targets set by the central bank.

Sri Lanka will reduce power prices by 22.5% from Tuesday, the utilities regulator has announced. This move seeks to alleviate the cost of living for millions in the Indian Ocean nation amidst its worst financial crisis in decades. The country had previously increased power prices significantly to secure a $2.9-billion bailout from the International Monetary Fund (IMF).

Industries will also benefit from a 33% cut in power tariffs, while poorer users will receive an approximate reduction of 2,000 rupees ($7) in their bills. Chairman of the Public Utilities Commission of Sri Lanka (PUCSL), Manjula Fernando, stated that the reduction is expected to assist in the rejuvenation of the economy and provide relief to the public.

Analysts believe the power price cut will help Sri Lanka meet a 5% inflation target set by its central bank. After a severe economic contraction in 2022, the nation's inflation rate fell drastically to 1.7% in June 2023, largely due to previous price cuts and fiscal measures mandated by the IMF's Extended Fund Facility.

(With inputs from agencies.)