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WafricNews  - June 11, 2025

COLOMBO, SRI LANKA - Struggling to stabilize its economy after an unprecedented financial collapse, Sri Lanka has announced a 15% hike in electricity tariffs, a move aligned with International Monetary Fund (IMF) bailout conditions aimed at restoring fiscal discipline.

The price adjustment, confirmed by the Public Utilities Commission, will take effect on Thursday and affects consumers nationwide. The decision reverses a government-enforced 20% cut made in January, which analysts say deepened losses for the state-run Ceylon Electricity Board (CEB) and threatened broader economic recovery efforts.

The tariff revision is part of IMF-mandated reforms under a four-year, $2.9 billion bailout package approved in 2023. Among the key conditions: reducing subsidies, improving revenue collection, and ensuring cost-recovery for state enterprises.

“We cannot afford to keep subsidizing loss-making sectors,” one government official told WafricNews on condition of anonymity. “This increase is painful, but necessary.”

A Nation Still Emerging from Bankruptcy

Sri Lanka declared bankruptcy in April 2022 after defaulting on $46 billion in foreign debt, triggering a cascade of economic turmoil. Foreign reserves had all but vanished, forcing the country to halt imports of basic goods — including fuel, medicine, and food — and unleashing months of public unrest.

Mass protests over severe shortages eventually forced President Gotabaya Rajapaksa from office in July 2022, making way for Ranil Wickremesinghe, who negotiated the IMF deal and launched a campaign of austerity and reform.

Although Wickremesinghe lost power in the 2024 elections, his successor, President Anura Kumara Dissanayake, has pledged to continue implementing the tough fiscal measures needed to stabilize the country’s finances.

Mixed Economic Signals

Despite widespread public frustration, recent indicators suggest a fragile recovery is taking hold. Inflation — which surged to nearly 70% in September 2022 — has since plummeted, and the country has experienced deflation in recent months.

Still, many households continue to feel the squeeze. Rising costs of living, higher taxes, and now increased electricity bills have added to the burdens faced by everyday Sri Lankans.

“We understand the frustration of the people,” said a Ministry of Finance spokesperson. “But the alternative is financial collapse — again.”

The IMF, in its most recent country report, acknowledged Sri Lanka’s progress, calling the recovery “real but delicate,” with risks still looming due to political volatility and global economic uncertainty.

A Global Lesson on Debt and Discipline

Sri Lanka’s crisis has served as a stark warning for other developing nations — especially those in Africa, Asia, and Latin America — about the dangers of over-borrowing, reliance on imports, and delayed fiscal reform.

As countries across the Global South face rising debt levels and pressure from international lenders, Sri Lanka’s ongoing IMF-led restructuring is being closely watched.

WafricNews will continue to monitor how Colombo navigates this high-wire act of reform, recovery, and political risk.


By WafricNews Business Desk.

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