Feb 16, 2012 (LBO) – A Sri Lankan fisherman was shot and killed as police quelled a protest following protests after a weakening exchange rate forced a sudden fuel price increase to reduce credit financed losses in the largely state-run energy sector. The Island newspaper said both police and the military were involved in quelling protests.
Sri Lanka steeply raised both diesel and petrol prices. Diesel is used by larger multi-day fishing boats and kerosene by smaller outboard motorboats
The protests came despite promises by the fisheries minister that subsidies will be given to fishermen.
Sri Lanka’s rulers scrapped an automatic fuel price adjustment formula that helps pass on import costs into the economy and maintain exchange rate and economic stability.
The exchange rate comes under pressure when energy utilities take too much credit from banks to cover losses.
Rulers in Sri Lanka usually give fuel and other subsidies telling an unsophisticated public that ‘the government bears the burden’ though in reality all government spending is covered by taxes on the same population or borrowings and central bank credit.
Fuel prices were raised last week after heavy bank borrowings by energy utilities to cover losses pr