Sri Lanka government ups prices

Bus fares may increase by 16%

Sri Lanka has raised bus fares, energy and food prices, amid a hike in diesel costs, according to AFP news agency.

The price rises also follow a worse-than-expected balance of payments deficit, the agency reports.

Last week, more than 1,000 opposition activists took to the streets of Sri Lanka's capital, Colombo, to protest at the rising cost of living.

Private bus operators will be allowed to increase fares by up to 16% to offset the 19% rise in diesel costs.

Prices of essential foods, cigarettes and alcohol were upped while electricity tariffs will increase by 5%.

The Central Bank said Sri Lanka's balance of payments dropped to a record $223m deficit in the six months to June, compared with a surplus of $502m last year.

The Central Bank said a rejuvenation of the economy would depend on better inflows of foreign funds and oil prices falling from the current level of $50 a barrel to $40 a barrel.

The bank said the balance of payments would improve if the state carries out a proposal to sell off a third of its petroleum distribution network to a foreign firm and secures more development aid from overseas.