Sri Lanka has unveiled a record $320 million relief package aimed at cushioning the impact of soaring energy costs on its most vulnerable communities, the government announced on Tuesday. The move comes as the island nation grapples with the economic fallout from escalating tensions in the Middle East.
President Anura Kumara Dissanayake said the package, the largest state handout in Sri Lanka’s history, would provide direct cash grants to thousands of fishermen and rice and tea farmers, while also extending additional support to those living below the poverty line—about 25 percent of the population.
Under the scheme, low-income households will receive an extra $25 this month to help mark the traditional Sinhala and Tamil New Year, and will also benefit from subsidised electricity bills. Fishermen using smaller boats will be eligible for fuel subsidies of up to $300 a month, while operators of larger vessels will receive about $483 a month for three months. Farmers will see the government absorb roughly 30 percent of the cost of urea fertiliser.
The total relief package, valued at 100 billion rupees, will be funded through the existing national budget over a three-month period. Dissanayake stressed the government’s determination to avoid a repeat of the 2022 economic crisis, when record inflation of 70 percent followed money printing to fund subsidies.
Sri Lanka remains under an International Monetary Fund (IMF) bailout programme that began in early 2023 with a $2.9 billion loan over four years. The president expressed confidence that the next tranche of about $700 million would be released by the end of next month, following a staff-level agreement with the Washington-based lender.
In addition, the government is in talks with Russia to resume imports of gas, coal, fuel, and fertiliser previously disrupted by US sanctions. “We have a window until April 11 to secure supplies from Russia after President Trump temporarily lifted sanctions,” Dissanayake said.
The measures follow steep price rises in fuel—up by a third—and electricity tariffs—up by as much as 40 percent—since the US-Israeli attacks against Iran began on February 28. A four-day working week introduced last month will be discontinued this week after officials concluded it had not delivered the expected energy savings.
As a nation that imports all its coal, gas, and petroleum needs and relies heavily on Middle Eastern oil, Sri Lanka’s latest intervention underscores the fragility of its energy security and the urgency of stabilising household and business costs amid regional instability.
