The latest electricity price rise in crisis-hit Sri Lanka has left stall owner Mohammed Lafeel in a quandary: the 66 percent increase means he can’t afford to pay for electricity but can’t manage without it so goes deeper into debt to keep it on.
Over the last month, with inflation hovering at 55 percent year-on-year, Lafeel says his income has fallen by about a third as fewer customers buy his knick-knacks as more of them struggle under the island’s worst financial crisis in 70 years.
Lafeel says he does not know how he can repay the 300,000 rupees ($835) he borrowed for his daughter’s wedding and has had to borrow more to reconnect the power at home after it was cut off because he hadn’t paid the bill.
“Everyone is under pressure,” Lafeel told Reuters news agency at his stall next to the main railway station in the city of Colombo, days after the second power price increase since a 75 percent rise in August.
“But how can we manage without power?”
The power price increase is the latest measure by Sri Lanka to clinch a $2.9bn loan from the International Monetary Fund (IMF) to tackle a crisis that evolved from the confluence of the COVID-19 pandemic battering its tourism-reliant economy, rising oil prices and populist tax cuts by a previous government.
President Ranil Wickremesinghe took office last July promising to pull the country out of crisis after protests against the economic mess led to the downfall of his predecessor.
On Tuesday, the cabinet said talks with the IMF were in the final stage. The government hoped to reach a deal by March and gradually reduce record-high interest rates in line with inflation, the president’s office said.
