International Monetary Fund Mission Chief for Sri Lanka Evan Papageorgiou said on Thursday that the Public Utilities Commission will need to receive a fresh second-quarter electricity tariff submission, because the original filing was made before the Middle East conflict escalated and no longer reflects current fuel price assumptions or the electricity generation mix.
Speaking at a press briefing after announcing the staff-level agreement on the combined fifth and sixth reviews of the Extended Fund Facility, Papageorgiou said the IMF hopes its Executive Board will take up the Sri Lanka case “toward the end of May or in early June,” subject to two prior actions being satisfied. Disbursement of roughly $700 million is contingent on that Board approval.
Papageorgiou said cost-recovery pricing in the power sector was essential to fiscal sustainability and to prevent losses accumulating at the restructured utility now operating under the National System Operator. But he stressed tariff adjustments must be paired with targeted, temporary protection for low-income households, including lifeline consumers using under 90 units a month. He noted that the PUCSL’s March 31 determination, which averaged an 11 percent increase, already absorbed some first-quarter losses.
On the NDB Bank fraud case, Papageorgiou said the Central Bank had assessed the lender as well-capitalised and liquid with ratios above regulatory minimums, describing the incident as “contained at the institutional level, rather than becoming systemic.” He said the IMF was “watching the situation carefully” and in dialogue with the CBSL.
Papageorgiou described the Middle East conflict as “one of the most severe shocks Sri Lanka has faced” since its 2022 crisis, warning of potential impact on growth, exports, remittances and connectivity. He said the Rs. 100 billion relief package announced by President Anura Kumara Dissanayake fitted the same principle of targeted, temporary support. The original staff-level agreement was signed in Colombo earlier on Thursday.
