According to Central Bank Governor Nandalal Weerasinghe, the Sri Lankan government’s initiatives, including a fuel subsidy and an additional surcharge on vehicle import taxes, have played a significant role in managing inflation levels in the country. This statement was made during a press conference in Colombo following the announcement of the monetary policy.
Earlier this week, President Anura Kumara Dissanayake’s administration approved a fuel subsidy amounting to Rs. 41 billion for the next three months, building on the Rs. 57 billion allocated for the period from April to June.
Governor Weerasinghe emphasized that without these measures, inflation rates would likely exceed current figures. He noted that the country could have experienced increased imports, complicating the accumulation of reserves.
Submit Your Press Release
Get your company news, announcements, launches, appointments and events in front of a wider audience.
Since July, inflation has surpassed the Central Bank’s established ceiling of 7 percent, reaching a peak of 8 percent in August. This spike followed a significant increase in fuel prices, which rose by over 50 percent due to escalating tensions in the Middle East that began in late February.
The Central Bank has set an inflation target of 5 percent for the last three years, with a lower threshold of 3 percent and an upper limit of 7 percent. The previous Rs. 57 billion fuel subsidy primarily focused on diesel, and the new allocation of Rs. 41 billion is also dedicated solely to diesel, which is crucial for public transportation.
Additionally, the government implemented a temporary 50 percent surcharge on Customs Import Duty for new personal vehicles on May 16, a measure that has been extended through December 31. This action is designed to mitigate the outflow of foreign currency.
In May, the Central Bank also escalated its monetary policy by raising the key interest rate by 100 basis points to manage excess economic demand and tackle demand-driven inflation.
(Colombo/September 30/2026)
