Sri Lanka raises price of diesel fuel

Sri Lanka considerably raised the price of diesel fuel to partially correct the deficiencies in pricing in refined fuels, a move that could help in the reducing the loans of petroleum distributors and help stabilize the country’s weakening exchange rate. Sri Lanka does not have an automatic fuel pricing scheme which could prevent economic imbalances from piling up and threaten the country’s currency peg and spur inflation. In 2000, Sri Lanka implemented a fuel pricing scheme which helped strengthen the exchange rate and lower inflation to near zero. But it was abandoned in 2004 because of pressure from the Marxist party Janatha Vimukthi Peramuna. (February 13, 2012)