Sri Lanka’s next expected payout from the International Monetary Fund (IMF) has been put on hold — indefinitely. The delay comes after the government failed to meet key conditions tied to the release of the next tranche of its bailout loan.
Although a staff-level agreement has been reached for the fourth review of the loan program, final approval from the IMF’s Executive Board is still pending. And without that approval, the much-needed funds won’t be released.
So, what’s holding things up?
One major issue is that Sri Lanka has yet to implement a cost-based electricity pricing system — a requirement clearly set by the IMF. The current pricing model is still seen as unsustainable and disconnected from actual power generation costs.
Another major stumbling block is the flat-rate tax system, which the government had promised to introduce by the end of April. That deadline has now passed without action, further complicating the country’s ability to meet IMF expectations.
Adding weight to the situation, the head of the IMF’s Sri Lanka office recently addressed the media and directly pointed out these unmet obligations — a clear sign that the fund is growing impatient.
The IMF funding is crucial for Sri Lanka, which is struggling with high debt, inflation, and economic instability. Without the next tranche, the country’s efforts to stabilize its economy could face serious setbacks.
The government has not yet issued an official statement in response to the delay, but experts warn that until the electricity tariffs and tax reforms are sorted out, no IMF cash will be flowing in.
