The Sri Lankan government on Saturday announced a sharp increase in the price of fuel, imposing new burdens on workers and the poor who already face declining living conditions made worse by the COVID-19 pandemic.
A liter of gasoline now costs 157 rupees (US $ 0.79), an increase of 14.5%, with diesel and kerosene being increased to 111 and 77 rupees, respective increases of 6 and 10%. The government is currently discussing a gas price increase of 25%.
Bakers, bus owners, three-wheeler drivers and food distributors have threatened to increase their prices, with baked goods increasing by 5 rupees and transport by 15%. On Tuesday, the privately held Prima Company raised the price of flour by 3.50 rupees per kilogram.
Saturday’s increases come on top of soaring food prices. According to data from the Central Bank, the official food inflation rate reached nearly 10 percent in May.
The price of rice, Sri Lanka’s staple food, climbed 27 to 46 percent in the past twelve months through May, while other staples, such as dhal and oil of coconuts, increased 36 and 30 percent over the same period.
Sri Lankan workers and the rural masses, who are already struggling to survive on meager incomes, adopt various coping mechanisms, including smaller meals, skipping meals, eating less preferred foods, or borrowing, pawning and selling. actives.
In 2013, the Colombo consumer price index was 100 points. In 2017, it hit 119, followed by 129.5 in 2019 and 135.4 last year.
In January 2020, the public sector real wage index was 95 points, but by December it had fallen to 92. It was 100 in 2016. Likewise, the private sector real wage index fell from 97 to 89 between January and December of last year.
On Tuesday, fishermen, who have been hit hard by the latest price increases, staged a torchlight protest in the southern town of Ambalangoda.
Workers who spoke to World Socialist Website this week expressed growing popular anger over rapidly worsening social conditions.
Manickam, a plantation worker from Glenugie Estate in Up-Cot, said: “We have already been affected by the high price of goods and therefore the increase in the price of fuel is going to make life intolerable. Our current salary is not even enough for food, so we cannot give our children three meals a day. Workers earn less than government and unions claim, they lie when they say we get 1000 rupees [less than $5] One day.”
A three-wheeled taxi driver explained that he and his family struggled to survive on his daily income. “We had to pawn the jewelry to buy food for my family and our two children. I looked for work, but I couldn’t find any, ”he said.
Iroshan, a fishmonger from Hikkaduwa, a southern coastal town, said: “I don’t know how I’m going to survive with this fuel increase. Fishing boats have stopped going to sea because they cannot cover their costs with the rising price of fuel. Fishermen in Negombo and Chilaw [on the west coast] are preparing protests and we plan to join them.
Chaminda, a fisherman from Marawila in Chilaw, explains: “I use gasoline for my small boat, but with this new price, my day’s fuel costs increase from Rs 1,000 to Rs 6,500. There is no guaranteed price system for fish, so if our catches go up, the market price goes down. We cannot afford to bear this price increase.
In Sri Lanka there are around 5,000 multi-day fishing boats. They typically spend several days at sea, with each vessel typically consuming between 10,000 and 15,000 liters of diesel. Some 30,000 fishermen and their families depend on the industry. Tens of thousands of small-boat fishermen, who mainly use kerosene, are also hit hard by the increases.
Desperate to deflect growing anger over the new fuel price, Sagara Kariyawasam, Sri Lanka’s ruling secretary general Podujana Peramuna, called on Energy Minister Udaya Gammanpila to take responsibility for the hikes and step down. Gammanpila is the leader of Pivithuru Hela Urumaya, which is also part of the ruling alliance in government.
President Gotabhaya Rajapakse, however, said the price increases were decided by a cost-of-living committee he chaired. The increases, he said, are the result of global crude oil prices, scarcity of foreign currency and losses of state-owned Ceylon Petroleum Corporation. He then absurdly claimed that this was linked to his “Climate Resilient Green Economy” policy to reduce fuel consumption.
“The government has taken steps to implement a number of proposals to change the consumption pattern based on imported fuels,” Rajapakse said. It was, he added, “a key factor in a common strategy that strengthens the local economy” and “safeguarding[s] the health and well-being of the population.
When Rajapakse talks about strengthening “the economy” he is not referring to the living conditions of Sri Lankan workers and the poor, but to the profits of big business. His insistence that there be a “change in the consumption model based on imported fuel” is not, however, limited to this product but extends to the importation of many essential products which have been discontinued or for which taxes were imposed.
Minister of State Ajit Nivard Cabraal admitted that rising fuel prices would push up the cost of living, but said “the government cannot go on without revising prices”.
The international consequences of the coronavirus pandemic have been catastrophic for the cash-strapped government and the national economy. Sri Lanka’s economy contracted 3.6% last year as exports, tourism and remittances fell.
This week, Fitch Rating revealed that the government will have to pay out $ 29 billion in loans by 2026. After reaching a financial swap deal with Bangladesh for $ 200 million earlier this month, the Central Bank is now trying to organize a million dollar swap with India in order to avoid default on foreign debt.
While the Rajapakse government is determined to place this financial burden on the masses by increasing the cost of fuel and the price of basic necessities, it demands that employees in the export sector, especially in the clothing, continue to work despite the continuing wave of COVID-19 infections.
At the same time, the Ministry of Labor announced last month that employers can defer their workers’ pension fund payments for an additional six months and said they should order their employees to continue working despite the restrictions. travel related to COVID-19. The unions have approved these guidelines and continue to discuss with the government how to keep the industry functioning.
Sri Lanka’s big corporations, with the blessing of the government and unions, have reaped record profits during the pandemic. The Hayleys conglomerate generated a turnover of 242 billion rupees last year and a net profit of 14 billion rupees, the highest in the company’s 143 years of existence. LOLC, a large finance company, made an after-tax profit of Rs 53 billion, the highest ever for a Sri Lankan company, while Hemas reported a net profit of Rs 3.3 billion.
As the business elite amass record fortunes, recent months have seen a wave of strikes and protests from key sections of the working class, especially among the public sector, plantations, clothing, railroads. iron and port personnel.
Nervous by these growing struggles, which are part of a rising movement of the international working class, President Rajapakse used the draconian Basic Services Law on May 27 and June 2 to ban strikes and industrial action in the public sector. . As of Friday, more than 50,000 health workers defied the authoritarian measures, staging a five-hour strike over jobs and demands for improved COVID-19 safety measures.
The rise in fuel prices by the government and other attacks on the masses further aggravate class tensions and create the conditions in Sri Lanka for a social explosion.