President Anura Kumara Dissanayake yesterday pledged that the Government would prevent a repeat of the 2022 economic collapse, as Sri Lanka confronts renewed pressure on the rupee and foreign exchange reserves amid a strengthening US dollar and the economic fallout from the Middle East conflict.
Addressing the ‘A Nation United’ Batticaloa District Program, the President said the Government was actively engaging with the International Monetary Fund on measures required to stabilise the economy under Sri Lanka’s Extended Fund Facility (EFF) program while responding to emerging global economic pressures.
According to the President, the Government has already submitted proposals to the IMF and is discussing strategies to ease pressure on the dollar, including reducing fuel consumption, curbing imports and lowering overall import expenditure.
“We must control this short-term pressure on the dollar. To achieve this, we must reduce fuel consumption. We must also pay greater attention to the use of imported goods and reduce import expenditure,” he said.
The President noted that the strengthening US dollar against global currencies had intensified pressure on the Sri Lankan rupee, while foreign exchange earnings from tourism, exports and remittances had weakened.
Tourist arrivals in April declined by 29% year-on-year, reducing dollar inflows, while export demand and remittance inflows also slowed amid global economic uncertainty, he said.
At the same time, Sri Lanka’s fuel import bill has surged sharply, increasing demand for dollars and placing additional strain on the rupee. Fuel import expenditure rose from $98 million in February to $216 million in March, $368 million in April, and $522 million in May, with monthly fuel imports now exceeding $500 million.
The President highlighted that the Government had allocated substantial resources to cushion citizens from rising energy costs triggered by geopolitical tensions and higher global fuel prices.
According to Dissanayake, the Government allocated Rs. 20 billion for fuel subsidies in April, with an additional Rs. 20 billion each planned over the next two months. He said the Government is currently providing a Rs. 100 subsidy per litre of fuel used by the public.
He also stated that despite upward revisions in electricity tariffs, 95% of electricity consumers would not experience higher bills due to Government subsidies, which are expected to continue until September at a cost of Rs. 15 billion.
The President said these interventions had been made possible by what he described as strong fiscal management and a Treasury account holding its highest surplus in Sri Lanka’s history.
“We have managed this successfully. We now possess a Treasury account with the highest surplus in Sri Lanka’s history,” he said, adding that the Government had also allocated Rs. 500 billion to address the impact of Cyclone Ditwah, alongside Rs. 100 billion to mitigate rising fuel and electricity costs.
While acknowledging that external pressures are likely to persist, Dissanayake maintained that the Government remained committed to protecting economic stability and avoiding another crisis.
“I assure you that we will never allow the country to return to the destructive economic conditions of the past,” the President said.
The remarks mark the President’s first public comments following the recent depreciation of the rupee, as policymakers seek to navigate rising external vulnerabilities while maintaining commitments under the IMF-backed reform program.
