SL fuel import costs could rise 40-45% in next 3 months

Sri Lanka’s fuel import costs have a likelihood of increasing by a further 40% to 45% in the next 3 months, with the US dollar to LKR exchange rate fluctuations – which average between 2% to 3% – adding further pressure, if the existing conditions of elevated oil pricing and supply disruptions are to persist, Ambeon Securities’ Macroeconomic Outlook report said.

“Fuel import cost can increase by a further 40% – 45% for the next 3 months. A worsening exchange rate of around 2-3% per month can further put pressure,” the report’s forecast on import costs in the next 3 months, based on the rise in oil prices, said. 

The report noted that fuel and coal made up 30% of Sri Lanka’s total import bill in March 2026, well above the long-term average of 18%. 

At present, the Sri Lankan Government absorbs nearly half the market price of diesel and kerosene, thereby every dollar increase in global oil prices increases the government’s subsidy bill.

The report also stated that if current external circumstances persist, the Sri Lankan rupee has a possibility of depreciating by 19%, by December of 2026, stating a forecast value of Rs 399.11 per dollar.

Additionally, inflation, according to the research unit’s forecast under current circumstances, has the likelihood of reaching 9.8% by December, with energy and electricity prices as contributing factors driving prices up.

The report also indicated the likelihood of a central bank rate hike, as T-bill auctions have seen rates moving up. “Policy rate is 7.75%. It is possible CBSL may revise rates upwards.”

“Rising inflation and depreciating currency are key concerns supporting a rate hike,” the report added.

On the external front, the report noted that Sri Lanka’s reserves are sufficient for the next 3.2 months, in order to sustain its import bill that is increasing due to its fuel and coal costs – with the concern of debt repayment looming in 2028. “Reserves sufficient for 3.2 months of imports. Debt repayments accelerating from 2028.”

Further, in tourism earnings, the unit forecasted the possibility of a 20% to 30% drop in arrivals, based on the drop in arrivals noted in April. “April 2026 arrivals are down 22%. Full-year arrivals are forecast at 1.9 million to 2 million (20–30% drop for the rest of the year).”

Source: The morning