News & market updates

IMF First Deputy Managing Director Gita Gopinath warned Sri Lanka has 'no room for policy errors' and said sound fiscal policy is critical to avoid a return to crisis. She said the IMF will remain a partner on the current Extended Fund Facility, which the government hopes will be the last such program as it aims to regain growth and repay debts by 2028.

IMF First Deputy Managing Director Gita Gopinath said Sri Lanka returned to macro stability with 5% GDP growth in 2024 and secured $3bn in debt forgiveness plus $25bn restructured under its IMF-supported program. She highlighted strong fiscal and governance reforms, central bank independence and a restructuring that halves external debt service and cuts debt stocks.

Gulf carriers including Emirates, Etihad, Qatar Airways, Gulf Air and Air Arabia suspended or rerouted regional flights after the Israel–Iran conflict, triggering over 6,000 global cancellations and stranding thousands of passengers. Emirates has halted services to Amman and Beirut until at least 22 June and to Tehran, Baghdad and Basra through 30 June.

Murban crude rose 10.7% to about $72.42/bbl (from $66.40) after Israel attacked targets in Iran. Higher feedstock costs could force Sri Lanka's Ceylon Petroleum Corporation to raise fuel prices or borrow, risking forex shortages and pressure on the rupee and monetary policy.

Iran vowed a 'powerful response' after Israel launched large-scale air strikes on multiple nuclear and military sites—killing senior commanders and scientists and hitting over 100 targets—raising fears of a wider regional war.

Brent crude jumped more than 10% after Israel said it struck Iran, later trading around $74.65 a barrel (about 8% above Thursday's close); gold rose 1.2% to $3,423.30/oz.

Colombo Stock Exchange tumbled as the ASPI fell 234.37 points (1.33%) to 17,427.08 following Israel's strike on Iran and resulting geopolitical tensions. Losses were led by heavyweight banks HNB, DFCC and Sampath, with John Keells and Melstacorp also down; turnover was Rs. 3.98bn.

Sri Lanka's stock market fell after Israel bombed Iran, with the ASPI down 1.33% to 17,427.08 and the S&P SL20 down 1.58% to 5,191.86. Heavyweights HNB, DFCC, Sampath, John Keells and Melstacorp declined and helped drive the sell-off as oil prices rose on geopolitical tensions.

Colombo market closed mixed — ASPI +4 points, S&P SL20 -11 on turnover of Rs.3.7bn — as investors reacted to an electricity tariff hike with increased selling pressure; Diversified Financials led turnover and foreign investors were net buyers of Rs.8.7m.

Sri Lanka raised electricity tariffs by 15% as a prior action under its USD 3 billion IMF bailout, a move that could unlock about USD 344 million pending the Fund’s board review. The hike and new bulk supply guidelines aim to restore cost-recovery and implement automatic pricing in the power sector.

Israel's strike on Iran sent oil up about 9% — Brent to $75.36/bbl and WTI to $74.20 — and knocked global stocks lower. Gold rose to roughly $3,434/oz and US 10-year yields fell to 4.31% as investors moved into safe havens.

Oil prices jumped over 7% after Israel said it struck Iran, with Brent up $5.29 (7.63%) to $74.65/b and WTI up $5.38 (7.91%) to $73.42/b, raising worries about disrupted supply. Stocks fell and investors moved to safe havens such as gold and the Swiss franc.

Sri Lanka will overhaul its electricity pricing methodology after a regulator 'clawback' produced a chaotic 20% cut in January that was partly reversed by a 15% rise, with the IMF saying tariffs must be cost-reflective before the next review. Regulators aim to reduce volatile swings, curb discriminatory pricing and strengthen CEB finances to support grid and renewables investment.

IMF is assessing a 15% electricity tariff increase and revised bulk supply transaction (BST) guidelines—prior actions for Sri Lanka’s next review—which would unlock about $344 million in financing once the Board completes the review. BST disputes and Ceylon Electricity Board losses are linked to currency depreciation and higher fuel/coal costs.

Vallibel One's Delmege Forsyth Energy was appointed the authorised Macro Distributor for Shell Lubricants in Sri Lanka on 11 June 2025, establishing a partnership to distribute Shell's lubricant products nationwide.

Advocata Institute submitted to the PUCSL a proposal to overhaul Sri Lanka's electricity tariffs, urging cost-reflective, non-discriminatory pricing with time-of-use/spot market mechanisms, a single lifeline subsidy, and full CEB cost transparency and audits.

Vallibel One PLC's Delmege Forsyth Energy has been appointed the authorized Macro Distributor of Shell Lubricants in Sri Lanka, forming a partnership to bring Shell's lubricant products to local consumers and industries.

Opposition leader Sajith Premadasa challenged President Anura Kumara Disanayake over a pre-election pledge to cut household electricity tariffs by one-third after the PUCSL approved a 15% tariff hike. He also urged action on the Ceylon Electricity Board and renegotiation of IMF terms tied to prices.

Sri Lanka's electricity regulator (PUCSL) said it will move to fairer tariffs to reduce large discriminatory gaps; under current tariffs the penalty for not running an industry rose to Rs20.14/unit (average unit cost ~Rs27.80) and some large households are charged up to Rs61/unit.

Sinopec will launch the second phase of its Energy Talent Growth Program in Sri Lanka this year, after running 18 training sessions for nearly 150 station managers across all nine provinces in 2024 to boost technical skills, operational standards and customer service.

The LMD-PEPPERCUBE Business Confidence Index rose 24 basis points to 196 in May (from 172 in April). The uptick was linked to local government election outcomes and coincided with the Central Bank's Sustainable Finance Roadmap 2.0 and a World Bank package of over US$1bn to support private-sector growth.

China's Commerce Minister Wang Wentao urged Sri Lanka to conclude a comprehensive free trade agreement and said a joint committee is launching research to boost Sri Lankan exports to China. He also discussed expediting a Sinopec-built refinery needing tax breaks, land and water, and invited Chinese firms to expand investment.

Colombo CPI rose 0.8% in May 2025 and is up 3.0% over 31 months since monetary stability was restored, with the food price index surging 2.7% in May. The central bank has cut policy rates, left excess liquidity high after running out of T-bills, and faces exchange-rate and reserve risks.

Sri Lanka and Abu Dhabi National Oil Company (ADNOC) held high-level talks to explore a long-term crude supply agreement and joint petroleum investments, including potential improvements to Sri Lanka's refining capacity and its position in the regional petroleum market.

ADNOC representatives met Sri Lankan ministers on June 30 to discuss supply and investment prospects, including a potential long-term crude supply agreement, improving Sri Lanka's refining capacity and groundwork for joint petroleum projects.

Hayleys PLC (via HayWind/Hayleys Fentons) signed a PPA with the Ceylon Electricity Board to develop a 50MW Mannar wind farm at $0.0465/kWh (≈40% below market), to be operational in 18 months. The BOO project will use 10 turbines, supply zero-emission power and cut fossil-fuel reliance.

John Keells unit JKCG Auto has taken reservations for over 5,000 BYD electric and hybrid vehicles in Sri Lanka and will increase model availability as shipments arrive.

SriLankan Airlines lost 3.4 billion rupees by March 2025 and is running losses on 31 of 45 routes. The carrier has $978m in liabilities and about $200m of bond interest arrears, and plans to lease five aircraft under a 'Hayleys Plan' to raise the fleet to 25.

IMF says approval of the fourth review of Sri Lanka's EFF programme is contingent on the government restoring electricity cost-recovery pricing and ensuring the automatic electricity price-adjustment mechanism. Once approved by the IMF executive board Sri Lanka would gain access to about USD 344 million.

Vietnam Electricity (EVN) raised tariffs by 4.8% from May 2025 — its fourth increase since 2023 — to offset higher costs from imported fuels, renewables and currency depreciation.