Sri Lanka’s path to securing the fourth tranche of its IMF loan now hinges on a set of tough new conditions—chief among them, a hike in electricity tariffs.
According to sources close to the ongoing negotiations, the International Monetary Fund has called for electricity pricing that accurately reflects the cost of generation. The IMF has also asked Sri Lanka to implement a transparent and systematic electricity pricing formula, rather than continuing with politically influenced or subsidized rates.
In addition to the tariff hike, the IMF has emphasized that the country’s primary account balance must remain consistent with the targets outlined in the initial agreement. This includes stricter fiscal discipline and expenditure control in order to maintain macroeconomic stability.
Only once these criteria are met will the IMF Executive Board consider approving the release of the next tranche of funding—support that Sri Lanka desperately needs to stabilize its economy.
The proposed conditions are likely to place additional pressure on the government, already facing public backlash over the rising cost of living. However, officials argue that meeting IMF conditions is essential to restore international confidence and prevent a deeper financial crisis.
