COLOMBO – Sri Lanka may see a record-high spending on fuel imports this year due to high global oil prices following the Middle Eastern conflict despite declining monthly fuel import bills, analysts say.
Sri Lanka saw its highest fuel import bill of US$5,040 million in 2012 amid a severe trade deficit that led to an IMF program.
The country has already spent US$4,487.2 million on fuel imports in the first nine months of this year, which is 51% higher than last year’s US$2,961.3 million in the same period.
The Central Bank in its latest September external trade deficit report said monthly expenditure on fuel imports declined for the fifth consecutive month in September 2026.
Sri Lanka produces no fuel and mainly depends on imports. Successive governments subsidized fuel when global prices were high, leading the state-owned fuel retailer Ceylon Petroleum Corporation into a debt crisis before the economy went bankrupt.
However, under the current IMF program, the government must implement market-reflective pricing.
Analysts expect this year’s fuel bill to end up near US$5.5 billion if the current Middle Eastern conflict prolongs until the end of this year.
The higher fuel bill has also exerted pressure on the rupee currency, which has fallen around 6.8% so far this year.
Sri Lanka’s inability to significantly trim its fuel import bill stems from deep-rooted structural dependencies across its energy, transportation, and industrial sectors.
Despite policy ambitions to accelerate renewable energy deployment, thermal power generation remains vital during dry seasons to prevent grid collapses and meet baseline electricity demand, keeping the Ceylon Electricity Board heavily reliant on imported heavy fuel and diesel.
Furthermore, the country’s transport sector is overwhelmingly fossil-fuel-driven, with limited electrification in public transit and an expanding vehicle fleet that continually elevates daily fuel consumption.
These domestic consumption pressures are further compounded by global commodity price volatility and geopolitical instability in key oil-producing regions like the Middle East, which periodically drive-up international crude and refined product prices.
Coupled with legacy data architecture gaps that complicate the implementation of targeted end-user subsidies, the state has periodically resorted to broad price cushions to prevent economic paralysis, ultimately locking Sri Lanka into high foreign exchange outlays whenever global oil markets spike.
-economynext.com
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