IBX-Jakarta. The monthly adjustments to gasoline prices by the Sri Lankan government are primarily based on the US dollar’s exchange rate and international oil prices. However, the recent price hike was solely due to the increased VAT rates introduced, rather than these usual factors. This increase, effective from Monday, marked the first rise in retail petrol prices following the implementation of new Value-Added Tax rates.
President Ranil Wickremesinghe emphasized in his New Year message that achieving economic stability demands navigating a challenging path, not strewn with ease but laden with substantial hurdles. The previous 15 per cent VAT rate for certain products has now been replaced by a three per cent VAT charge starting Monday. This shift, particularly affecting formerly VAT-exempt goods, to an 18 per cent VAT rate has encountered significant public disapproval.
Sri Lanka faced a severe economic crisis, leading to its first-ever sovereign default announced in April 2022. The nation experienced its worst financial turmoil, witnessing dwindling foreign exchange reserves and public protests due to shortages in fuel, fertilizers, and essential commodities.
Source: Sri Lanka raises taxes ahead of foreign debt deal (firstpost.com)