The International Monetary Fund (IMF) has announced that the release of Sri Lanka’s next loan instalment under its Extended Fund Facility (EFF) could be delayed, citing unmet structural and policy commitments.
In a virtual press briefing, Evan Papageorgiou, IMF’s Mission Chief for Sri Lanka, said that although a staff-level agreement has been reached for the fourth review of the programme, the fifth tranche, amounting to $344 million, still requires approval from the IMF Executive Board.
This process, he noted, could take several more months.
“The approval is contingent on two key conditions being fulfilled. First, Sri Lanka must ensure that a cost-based electricity pricing system is operational and that the automatic tariff adjustment mechanism is functioning as intended. Second, financial assurances from creditors must be finalised, and there must be demonstrable progress on debt restructuring,” Papageorgiou said.
The IMF has repeatedly pressed the government to revise electricity tariffs to reflect the actual cost of power generation, warning that failure to do so places a continued burden on the state-run Ceylon Electricity Board (CEB) and, by extension, the national budget.
“Sri Lanka missed a structural benchmark by not implementing the new tariff system by the end of April,” Papageorgiou said.
“While no explicit deadline has been imposed for tariff adjustments, the urgency remains. Delays jeopardise not only the IMF disbursement but also the credibility of the reform agenda,” he added.
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