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Sri Lanka: Fuel Prices Cut, Other Steps Taken to Aid Budget, Industry

(Jan. 5, 2009) The Government of Sri Lanka has taken steps to cut the cost of living for its citizens and strengthen the economy. They were announced in a special Cabinet meeting called by President Mahinda Rajapaksa on December 30, 2008. The budgets of all state institutions are to be cut by five percent, and the expense allowances for the Prime Minister and the President will be reduced by 15 percent. Members of Parliament in Sri Lanka are given housing allowances; these will be cut in half. The prices of various types of fuels, including gasoline, diesel, and kerosene, are to be reduced as well; the price cuts range from Rs10 to Rs276 per liter, depending on the product involved (about US$0.09 to 2.42). In addition, a coupon system will be created for those who operate three-wheeled vehicles. The operators will be entitled to purchase up to four liters of petrol for each such vehicle owned at an Rs20-reduced price, up to 75 liters per operator every month. (Sri Lanka Government Reduces Allowances for Legislators, Slashes Fuel Prices, COLOMBOPAGE NEWS DESK, Dec. 30, 2008, available at

The Government has also taken steps to aid two important industries, tea and rubber, including the establishment of price guarantees. A price of Rs45 per kilogram has been set for tea and of Rs150 per kilogram for rubber. Furthermore, tea growers are now entitled to a subsidy for the purchase of fertilizer, and the tax on rubber imports has been increased to 15 percent. (Id.)