Sri Lanka unveils a $320 million subsidy package for farmers, fishermen and low-income households to offset soaring energy costs linked to the Middle East conflict
COLOMBO: Sri Lanka has announced a record USD 320 million relief package to support farmers, fishermen and low-income households hit by soaring energy costs.
President Anura Kumara Dissanayake said the three-month package is the biggest state handout ever for the island nation of 22 million.
Cash grants will be paid directly to thousands of fishermen and rice and tea farmers. Those living below the poverty line, about 25% of the population, will receive an additional USD 25 this month for New Year festivals and have their electricity bills subsidised.
“The total relief package is valued at 100 billion rupees (USD 320 million) over three months,” Dissanayake said. He confirmed the government is funding this through the existing budget to avoid a repeat of the 2022 economic meltdown.
That crisis saw record 70% inflation after the government printed money to fund subsidies. Sri Lanka remains on an IMF bailout programme that began in early 2023 with a USD 2.9 billion loan.
Dissanayake expressed hope for drawing the next USD 700 million IMF tranche by the end of next month. Under the new scheme, fishermen using smaller boats will get up to USD 300 monthly in fuel subsidies.
Operators of bigger boats will receive about USD 483 per month for three months. The government will also absorb about 30% of the cost of urea fertiliser for farmers.
It will bear part of electricity generation costs, up to 15 billion rupees (USD 48 million). Officials are in talks with Russia to resume imports of gas, coal, fuel and fertiliser previously hit by US sanctions.
“We have a window until April 11 to secure supplies from Russia after President Trump temporarily lifted sanctions,” Dissanayake stated. Sri Lanka has increased fuel prices by a third and raised electricity tariffs by up to 40% since late February.
A four-day working week introduced last month will be discontinued this week as it failed to deliver expected energy savings. The nation imports all its coal, gas and petroleum requirements, relying heavily on Middle East oil.