IMF team to visit Sri Lanka this week as officials prepare for a formal staff mission that will assess the country’s ongoing economic reform programme, review recent macroeconomic developments and evaluate progress on key structural reforms under the Extended Fund Facility (EFF).
IMF team to visit Sri Lanka this week to review economic reform progress
The International Monetary Fund (IMF) country team is scheduled to visit Sri Lanka from June 24 to June 30, with discussions expected to focus on the implementation of reforms that remain central to the country’s economic recovery strategy.
IMF Mission Chief for Sri Lanka Evan Papageorgiou confirmed the visit through a social media post, stating that the delegation will meet government authorities and a broad range of stakeholders during the week-long mission. The discussions will review recent economic developments while taking stock of the overall implementation of the country’s reform agenda.
Papageorgiou said the IMF looks forward to constructive engagements that will help evaluate the progress achieved under the programme and identify priorities for the next phase of reforms.
The visit follows the IMF Executive Board’s successful completion of the combined fifth and sixth reviews of Sri Lanka’s Extended Fund Facility on May 27, allowing the reform programme to continue after the country demonstrated strong performance against several key benchmarks.
The IMF has repeatedly stated that the programme is designed to restore macroeconomic stability, rebuild fiscal sustainability and place Sri Lanka on a path towards long-term economic resilience following the unprecedented financial crisis of 2022.
Although the latest review recognised Sri Lanka’s progress, the IMF also stressed that several important Sri Lanka economic reforms remain unfinished. Among the areas receiving particular attention are the restructuring of State-Owned Enterprises (SOEs), improvements to public financial management and continued fiscal discipline.
One of the key issues expected to dominate the upcoming discussions is the government’s commitment to maintaining cost-recovery pricing mechanisms in the energy sector. According to the IMF, restoring automatic pricing formulas for fuel and electricity has been one of the programme’s most significant structural achievements.
The global lender recently confirmed that Sri Lanka successfully met the required cost-recovery benchmarks for both fuel and electricity pricing. These reforms were considered essential conditions for the Executive Board to approve the latest programme review.
Historically, below-cost pricing of fuel and electricity resulted in substantial financial losses for state-owned enterprises, increased pressure on public finances and weakened Sri Lanka’s external sector. The IMF has consistently argued that maintaining market-based pricing mechanisms is necessary to prevent the recurrence of unsustainable fiscal burdens.
However, global developments created fresh challenges earlier this year. Rising tensions and conflict in the Middle East pushed international oil prices sharply higher, temporarily increasing domestic energy costs and creating pressure on households and businesses.
To cushion the immediate impact, the Sri Lankan government introduced a Rs.100 billion emergency energy relief package. The package included temporary on-budget subsidies amounting to Rs.100 per litre of diesel and Rs.20 per litre of petrol to help protect vulnerable consumers from sudden price increases.
While the IMF accepted these temporary support measures given the exceptional circumstances, it maintained that they should remain short-term interventions. The programme requires the government to continue applying the automatic monthly pricing formula to ensure domestic fuel prices accurately reflect movements in international markets.
As part of this commitment, retail fuel prices were subsequently revised upward in line with global oil prices, while electricity tariffs increased by an average of 11 percent to restore full cost recovery across the energy sector.
The IMF has also made it clear that any remaining energy subsidies should be fully phased out and capped by September 2026, reinforcing the government’s commitment to sustainable fiscal management under the IMF Extended Fund Facility.
Government officials have indicated that if international oil prices stabilise or decline in the coming months, there may be room to reduce domestic fuel prices by August or September without departing from the established pricing formula.
As IMF team to visit Sri Lanka this week, the outcome of the mission will be closely watched by investors, development partners and financial markets. The discussions are expected to provide an updated assessment of the country’s reform momentum while helping determine the next steps required to sustain economic stability, strengthen public finances and support Sri Lanka’s long-term recovery.