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As IMF decision looms: Fuel subsidy on the line

As IMF decision looms: Fuel subsidy on the line

24 Mar 2026 | BY Buddhika Samaraweera


  • Govt warns subsidies may end as early as 1 May without approval
  • Rs. 20 b monthly burden could be transferred to consumers
  • Middle East tensions add uncertainty to fuel pricing decisions


Fuel prices could rise further in the coming weeks, with the Government warning it may be left with no choice but to pass on subsidy costs to consumers if it fails to secure International Monetary Fund (IMF) approval to continue the current pricing arrangement.

Speaking to The Daily Morning yesterday (23), Ministry Secretary Prof. Udayanga Hemapala said the Government will, for now, continue to absorb part of the fuel cost, amounting to Rs. 100 per litre of diesel and Rs. 20 per litre of petrol, until 1 May. However, he stressed that any extension beyond that date hinges on both developments in the Middle East and IMF approval.

“If the situation in the Middle East continues and we receive IMF approval, we can continue this. If the IMF does not grant approval, we cannot continue it. In that case, we will have to add that portion to the fuel prices,” he said.

When asked about a timeline for the IMF’s decision, Prof. Hemapala said an IMF delegation is expected to visit Sri Lanka in the coming days, during which the Government hopes to receive clarity on the matter.

Cabinet Spokesperson Dr. Nalinda Jayatissa said on 22 March that the Government is currently absorbing approximately Rs. 20 billion per month to cushion the impact of fuel costs on consumers. This includes Rs. 100 per litre of diesel and Rs. 20 per litre of petrol. He warned that if the State were to bear the full cost of fuel imports, it would result in an additional annual expenditure of around US Dollars 1.5 billion, placing significant strain on both the fuel sector and the broader economy.

Meanwhile, the Ceylon Petroleum Corporation revised fuel prices with effect from midnight on 21 March, the latest in a series of increases in recent weeks. Under the new pricing, 92 Octane petrol rose by Rs. 75 to Rs. 375 per litre, while 95 Octane petrol increased by Rs. 95 to Rs. 450 per litre. Auto diesel was raised by Rs. 75 to Rs. 350 per litre, and Super Diesel by Rs. 80 to Rs. 420 per litre.

 




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