Lanka’s eligibility to draw next IMF tranche of USD 700 mn hinges on ‘restoration of cost-recovery pricing for electricity and fuel’

When asked if the government's fuel subsidy program, which includes a Rs. 100 per liter diesel subsidy, aligns with the IMF's pricing guidelines, Kozack refrained from commenting directly on the issue. However, she emphasized that the program necessitates both pricing reforms and protections for vulnerable groups. Kozack also noted that Sri Lanka recently endured "two very large shocks," referring to Cyclone Ditwah and the broader impacts of the conflict in the Middle East, which have influenced the economy and the public. Despite these difficulties, she stated that Sri Lanka's reform efforts are producing positive outcomes, mentioning strong fiscal performance in 2025, advancements in debt restructuring, a 5 percent economic growth rate, and a return to positive inflation after a deflationary period. She reiterated the IMF’s commitment to aiding Sri Lanka’s reform initiatives, emphasizing ongoing collaboration with the authorities to maintain economic stability and promote recovery.