Price Cushion

SINGAPORE, September 19, 2006 (LBO) – Sri Lanka said Tuesday it was moving towards eliminating oil subsidies that are threatening to blow a hole in the nation’s budget and asked lenders for financial help to tide over oil shocks.

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, somew