Sri Lanka will have to wait longer for the next installment of its IMF bailout as key conditions remain unmet, according to the Fund’s Sri Lanka Mission Chief, Evan Papageorgiou. Addressing an online media briefing, Papageorgiou confirmed that while the staff-level agreement for the fourth review has been reached, approval by the IMF Executive Board will take “at least a few more months.”
What’s holding things up? Two critical reforms that Sri Lanka has yet to fully implement.
First, the country must introduce a cost-reflective electricity tariff and ensure that the automatic power pricing mechanism is functioning properly. Second, the government must complete a review of financial guarantees to confirm that multilateral partners are committed and that sufficient progress has been made on debt restructuring.
Although the IMF has not issued a deadline for the electricity price hike, Papageorgiou emphasized that the government has been reminded repeatedly to adjust tariffs urgently to match actual power generation costs. “The current pricing system simply doesn’t cover the cost,” he warned, adding that the Ceylon Electricity Board (CEB) must stop being a burden on public finances.
He further revealed that Sri Lanka missed a structural milestone by failing to introduce a proper tariff system by the end of April. Even the tariff revision by the Public Utilities Commission, scheduled for April, has now been delayed.
Until these reforms are in place, the IMF’s Executive Board will not green-light the release of the fifth tranche of $344 million, part of a broader $3 billion package. If approved, the new release would bring the total funds disbursed to Sri Lanka to $1.722 billion.
The message from the IMF is clear: no reforms, no funds.
