Kathmandu. Sri Lanka has increased the price of petrol and diesel by about 6 percent. The decision has been taken with the aim of adjusting the price of fuel according to the economic reform plan of the International Monetary Fund (IMF) and gradually removing government subsidies.

According to state-run fuel companies, the price of petrol has increased from Rs 410 to Rs 434 per liter. Similarly, the price of diesel has been increased to Rs 407 per litre from Rs 392 per litre.

The price hike comes days after the IMF released another tranche of $69.5 million as part of its $2.9 billion bailout package. The program, which began in early 2023, aims to stabilize the country, which is already in financial crisis.

The IMF has been pressuring Sri Lanka to adjust the cost of both fuel and electricity. The government has said that it will start the process of removing the subsidy given to the energy sector.

President Anura Kumar Dissanayake said in a letter to the International Monetary Fund (IMF) that the fuel subsidy would be completely eliminated by September.

Analysts say tensions in the Middle East since February 28 have disrupted energy supplies, putting Sri Lanka’s import-dependent economy under further pressure.

Sri Lanka imports all of its fuel and relies on coal to generate electricity. In 2022, the country defaulted on $46 billion in foreign debt. Since then, efforts have been made to stabilize the economy with the help of the IMF.