IMF says Sri Lanka must implement cost-recovery fuel and electricity pricing before approval of the next US$700 million assistance.
IMF approval for Sri Lanka’s next assistance depends on fuel and electricity pricing reforms, along with several other prior actions, officials said.
The International Monetary Fund has stated that the completion of Sri Lanka’s combined fifth and sixth reviews under the Extended Fund Facility is subject to approval by the IMF Executive Board.
Addressing a media briefing, Julie Kozack, Director of the Communications Department at the IMF, said a staff-level agreement had been reached between IMF staff and Sri Lankan authorities on April 9.
She said Sri Lanka must complete several prior actions before the programme is submitted for Executive Board approval.
These include implementing cost-recovery pricing formulas for electricity and fuel.
They also include completing social protection mechanisms to protect vulnerable and disadvantaged communities, as well as finalizing financial guarantees.
Kozack further stated that, after Executive Board approval, Sri Lanka will be able to access financial assistance of nearly US$700 million.
She did not give a direct answer when asked whether the government’s fuel subsidy scheme, particularly the Rs.100 per litre subsidy on diesel, aligns with the IMF’s pricing framework.
However, she again emphasized that the programme expects both cost-recovery price reforms and mechanisms to protect vulnerable communities.
She also noted that the recent cyclone Sri Lanka faced, along with the external impact of Middle Eastern conflicts, has severely affected the country’s economy and its people.
