Sri Lanka to cut fuel subsidy to meet IMF goal

Sri Lanka from next year will cut a fuel subsidy to the state-run petroleum company that cost it US$214.8 million this year as it aims to meet an International Monetary Fund (IMF) budget reduction target, Petroleum Minister Susil Premajayantha said. Sri Lanka is trying to reverse decades of overspending on poorly run state companies. Its plans to cut the budget gap to 8% of GDP, under a US$2.6 billion IMF loan program, hinges on its efforts to streamline state enterprises. The Ceylon Petroleum Co. (CPC) and its sister utility company Ceylon Electricity Board (CEB) are among the biggest cost centers for the state, and the IMF has urged rationalization to bring both back to a breakeven point. Premajayantha said the government has raised petroleum prices by 60% as of September 1. “By January we are not going to subsidize,”Premajayantha told Reuters. (October 5, 2010)