Jan 05, 2022

Basil changes his tune on IMF loan, at the Cabinet meeting!   Featured

Finance Minister Basil Rajapaksa, has informed the Cabinet of the increase in fuel, electricity, water, essential food prices and tariffs as well as cuts in the public service, if International Monetary Fund assistance is sought.

The Cabinet meeting was held under the patronage of President Gotabaya Rajapaksa on Monday (03).  

The Ministry of Finance has stated that discussions with the International Monetary Fund and other international institutions have identified signs of the rupee floating freely as well as raising tax rates.

The rupee could depreciate by about 15% if the rupee floats freely, the Ministry of Finance has concluded.

Accordingly, the Finance Minister has pointed out that a kilo of dhal which is at Rs. 280 could increase to around Rs. 400. He also noted that the minimum price of a litre of diesel would have to be increased by around another Rs. 25.

Under the tax hike, the existing 8% VAT should be increased, which could lead to an increase in fuel, electricity and water tariffs.

Accordingly, the average price of a unit of electricity will have to be increased from the current Rs. 16 to Rs. 25 and the water tariff will have to be increased by Rs. 10 per unit, the Finance Minister has informed the Cabinet in a memorandum.