Bankrupt Sri Lanka slashes fuel prices

Cash-strapped Sri Lanka slashed fuel prices on Monday_ the second cut in as many weeks_ after the World Bank warned that the country's economy will shrink an unprecedented 9.2% this year.

The energy ministry said the petrol price will be reduced by 40 rupees to 370 rupees ($1.02) a litre effective from Monday night after a similar 10% reduction earlier this month.

But the price of regular petrol is still twice the amount before the start of the crisis in 2021while diesel is three and a half times more than what it was in December last year.

Earlier 2022_ motorists spent weeks to get fuel_ contributing to weeks of protests that forced president Gotabaya Rajapaksa to flee the country in July and quit.

The wait at the pumps has reduced to a few hours in recent weeks_ but fuel is still strictly rationed because of an enduring shortage of greenback needed to pay for essential imports.

Public transport also ground to a halt due to a lack of diesel but now services are almost back to normal_ although many fares -- in common with soaring prices for other services and goods -- have doubled.

Official annual inflation rates are running at close to 70%.

The latest lowering of petrol and diesel came after the World Bank warned that the economic contraction will be worse than the 8.7 ¦ per cent forecast by the Central Bank of Sri Lanka.

The World Bank in its latest country update published last week said the economy will continue to shrink next year too. It expects a 4.2% contraction next year.

In addition to the coronavirus pandemic and the Ukraine war_ Sri Lanka s worst crisis since independence is also partly blamed on the sharp tax cuts announced by Rajapaksa after he came to power in November 2019.