The International Monetary Fund (IMF) has made it clear that the approval of Sri Lanka’s fourth review under the Extended Fund Facility (EFF) hinges on the completion of key prior actions by the government, most notably the restoration of electricity cost recovery pricing.
Speaking at the IMF’s weekly press briefing, spokesperson Julie Kozack stated that while staff-level agreement was reached on April 25, formal approval by the IMF Executive Board, which would unlock a disbursement of approximately USD 344 million, remains contingent on two critical conditions.
Energy pricing a key hurdle
Kozack emphasized that the principal prior action required is the reinstatement of electricity cost recovery pricing and the effective operation of the automatic electricity price adjustment mechanism.
“This mechanism is vital to ensure the financial sustainability of the power sector and reduce the fiscal burden,” she said, adding that restoring cost-reflective electricity tariffs is central to macroeconomic stability.
Debt restructuring and financing assurances under review
The second major condition involves the IMF’s financing assurances review.
This review will assess the progress made in Sri Lanka’s debt restructuring efforts and verify whether multilateral partners have reaffirmed their financial commitments to the country.
“The timing of the Executive Board meeting will depend on these two factors — completion of the prior actions, and satisfactory outcomes in the financing assurances review,” Kozack said.
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