The Public Utilities Commission of Sri Lanka (PUCSL) announced a 15% increase in electricity tariffs, ahead of a key visit by a senior International Monetary Fund (IMF) official to the island next week.
The visit by the First Deputy Managing Director (FDMD) of the IMF Dr. Gita Gopinath, comes on the backdrop of electricity pricing being a key condition imposed by the global body, as Sri Lanka continues to receive desperately needed financial support.
Gopinath is scheduled to be in Sri Lanka from 15-16 June 2025. According to the Central Bank of Sri Lanka, this visit is particularly significant as it marks the first time since 2005 that a serving FDMD of the IMF will visit the country.
Her visit includes attending the conference titled “Sri Lanka’s Road to Recovery: Debt and Governance,” which is jointly hosted by the Ministry of Finance, Central Bank of Sri Lanka, and the IMF on 16 June. The conference aims to reflect on Sri Lanka’s efforts to restore macroeconomic stability, implement debt restructuring, and governance reforms all central to the IMF’s engagement with Sri Lanka. Gopinath is also expected to hold bilateral discussions with Sri Lankan authorities and key stakeholders.
However, her visit comes as electricity tariff hikes, a key condition of the IMF-supported reform programme, continue to spark public outcry and hardship. The Ceylon Electricity Board (CEB) submitted yet another proposal to the (PUCSL), recommending a further increase of approximately 20%. This morning PUCSL announced a 15% increase.
This follows the IMF’s call last month for critical reforms related to electricity pricing. IMF Mission Chief Evan Papageorgiou said current tariffs fall short of covering the actual costs of power generation, transmission, and distribution. He also noted that the automatic adjustment mechanism based on bulk supply has not functioned as intended.
Last October, an 18% increase in electricity rates including raising the tariff for the lowest domestic category from Rs. 150 to Rs. 180 for up to 30 kilowatt hours left thousands of households in the dark. CEB data shows that 145,000 homes were disconnected from the grid in November and December last year alone. The October hike followed a 66% tariff increase in February 2023, which was only partially rolled back with a 14% reduction in July. Fixed charges were also sharply raised. Power and Energy Minister at the time Kanchana Wijesekera had defended the increases, stating the need for fully “cost-reflective” pricing.
In 2023, a combined total of over 1.06 million households out of the country’s 7 million users had their electricity cut off by the CEB and Lanka Electricity Company Limited (LECO).
Meanwhile, the Central Bank of Sri Lanka (CBSL) also revealed that the cost of living in the country has doubled since 2021. CBSL Assistant Governor Chandranath Amarasekara acknowledged at a recent press conference that despite a decline in inflation in the last year, prices remain substantially higher than three years ago. He noted that occasional salary increases have not matched productivity growth, exacerbating the burden on households.
Sri Lanka’s economy continues to be fragile after it collapsed in 2022, leading to Colombo to default on its sovereign debt.