Public Administration minister Sarath Amunugama said the government “has responded appropriately to the sustained sharp rise in oil prices,” by adjusting domestic prices and moving towards oil futures to hedge future risks.

“Oil subsidies, which had been an enormous burden on the budget, have been eliminated,” he told delegates during the IMF World Bank annual meetings here.

Sri Lanka consumes around 30 million barrels of oil a year, buying 2.2 million metric tones oil light crude from Iran, Saudi Arabia and Malaysia.

The country’s oil bill is expected to climb to about 2.0 billion dollars this year, up from 1.6 billion dollars in 2005, due to surging global fuel prices.

“We reiterate our call for the creation of a special medium term oil facility to assist countries that have been adversely affected by the sharp increases in oil prices,” he said in an appeal to some of the world’s biggest financial backers.

While domestic fuel prices have been revised, somewhat modestly, Amunugama said the government wants to cushion future oil shocks, by hedging prices.

Amunugama, who heads the Sri Lankan delegation said: “price adjustments, in the context of growing domestic incomes and investment activity, have led to some upward price pressures.”

To achieve this, the government is ‘strengthening’ macro economic stability, while ‘fiscal consolidation is under way.’

He said Sri Lanka welcomed upcoming reforms approved by IMF and World Bank members to strengthen each institutional governance structure.

However, the tiny Indian Ocean Island threw her lot with South Asian neighbours of India and Maldives to join a minority group of 23 countries that voted against IMFs reforms on Monday.

Countries that opposed IMF’s reform agenda, felt the issues at hand did little to give voice to emerging economies like Sri Lanka.

However, the reform agenda, found favour with 90.8 percent of the IMF's 184 members, which gave more say to rising economies like China, South Korea, Mexico and Turkey.