IMF praises Sri Lanka’s reform progress, nearing next tranche of funding

The International Monetary Fund (IMF) has commended Sri Lanka for making significant strides in implementing tough but necessary economic reforms, bringing the country closer to receiving the next tranche of IMF financial assistance.

Julie Kozack, Director of the IMF’s Communications Department said that a Staff-Level Agreement was reached on April 25 between IMF staff and Sri Lankan authorities for the fourth review of the country’s ongoing Economic Reform Programme.

"The program and Sri Lanka's ambitious reform agenda continue to deliver commendable outcomes,” Kozack said. “Performance under the program remains strong overall, and the government remains committed to the program objectives. Completion of the review is pending Executive Board approval, which is contingent on the completion of prior actions.”

She confirmed that the IMF is currently assessing recent measures announced by Sri Lanka’s regulator on June 11, which include a 15% increase in electricity tariffs, and the publication of revised bulk supply transaction account guidelines.

These actions are part of the agreed prior conditions. Upon Executive Board approval, Sri Lanka would gain access to approximately $344 million in funding. A Board date will be announced in due course.

Kozack also highlighted Sri Lanka’s efforts on governance reform, pointing to the publication of an updated government action plan. This includes key commitments such as enacting a public procurement law, introducing an asset recovery law and aligning reforms with the IMF's Governance Diagnostic Report recommendations.

Addressing global economic uncertainty, Kozack said that elevated risks worldwide could affect countries like Sri Lanka. If such downside risks materialize, the IMF would work closely with Sri Lankan authorities to assess impacts and determine appropriate policy responses within the current program framework.

She emphasized that maintaining reform momentum—both in macroeconomic policies and structural growth reforms—is essential not just for Sri Lanka, but for all member countries.

“Sri Lanka has made commendable progress in implementing some very difficult reforms,” Kozack said. “These efforts are starting to bear fruit—growth is rebounding, inflation is low, international reserves are increasing, fiscal revenue is improving, and the debt restructuring process is nearly complete. It’s important to acknowledge this progress and ensure that reform momentum continues through the remainder of the current program.”