The International Monetary Fund (IMF) has issued a strong warning to Sri Lanka, urging the government to maintain its cost-recovery electricity pricing mechanism, calling it a critical pillar for long-term economic stability and fiscal discipline.
Speaking at a media briefing, IMF Mission Chief for Sri Lanka Evan Papageorgiou emphasized that energy sector reforms, especially in pricing and governance, are core structural benchmarks under the Fund’s Extended Fund Facility (EFF) programme.
“This is one of the building blocks of the EFF programme. The goal is for the [Ceylon Electricity Board] to function on commercial terms, making sound financial decisions like any private enterprise,” Papageorgiou said.
He warned that failure to implement key reforms could expose the country to significant fiscal risks, undermining efforts at economic recovery.
Papageorgiou also highlighted the importance of stable and predictable electricity tariffs to foster investor confidence and ensure both consumer affordability and long-term economic resilience.
He noted that sustaining cost-recovery pricing helps limit taxpayer burdens and supports transparent, efficient energy governance.
The IMF is expected to review Sri Lanka’s electricity tariff submission to the Public Utilities Commission of Sri Lanka (PUCSL) in October, and assess the tariff methodology review due by the end of November — both of which are part of the Fund’s fifth programme evaluation.
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