IMF tells Sri Lanka to keep reform engine running as global turbulence looms

IMF Mission Chief Evan Papageorgiou says Fourth Review shows strong performance, with all quantitative targets met except underreported expenditure arrears Explains underreporting linked to interest subsidies for senior citizens and reporting gaps in line Ministries Emphasises maintaining cost-reflective electricity tariffs to protect fiscal stability and reduce taxpayer burden Notes PUCSL tariff formula to be reviewed with World Bank and ADB support by November Cautions against opaque tax exemptions, pushing for transparent rule-based framework Structural benchmarks set to amend SDP Act by August and Port City Act by October IMF Resident Representative Martha Woldemichael highlights progress on Central Bank independence, anti-corruption laws and governance action plans

- BY CHARUMINI DE SILVA

INTERNATIONAL Monetary Fund (IMF) Mission Chief for Sri Lanka Evan Papageorgiou yesterday insisted Sri Lanka sustain the remarkable momentum of reform progress amidst looming external shocks, particularly global trade policy volatility, which could threaten recovery.

Speaking to journalists, he described Sri Lanka's program performance under its Fourth Review as "generally strong," acknowledging that all quantitative targets for the review had been met, except for an issue around underreported Government expenditure arrears, where a waiver was granted after authorities took corrective measures.

On 1 July, Sri Lanka secured another vote of confidence from the IMF, after its Executive Board approved a $ 350 million disbursement under the country's Extended Fund Facility (EFF) program, allowing the authorities to draw $ 350 million, bringing the total to $ 1.74 billion.

He said that the country delivered on two prior actions ahead of the Fourth Review including; restoring cost-reflective electricity tariffs for the rest of 2025 and operationalising the automatic electricity tariff adjustment mechanism.

"Overall, there has been good progress and it is vital to sustain this reform momentum and continue building on these hard-won gains," he said, adding that Sri Lanka's outlook remains positive."