IMF Pushes for Commercially Viable Power Sector in Sri Lanka

COLOMBO (News 1st); The IMF has emphasized the critical role of cost-reflective electricity pricing in ensuring long-term economic stability and fiscal responsibility as part of the country’s ongoing IMF-supported reform program.

Speaking on the matter, Evan Papageorgiou, IMF Mission Chief for Sri Lanka, stated that aligning electricity tariffs with actual costs is a key component of the IMF program and is supported by both the Public Utilities Commission of Sri Lanka (PUCSL) and the government.

“Maintaining cost-recovery electricity pricing is very important for containing fiscal risks and supporting long-term economic stability,” he said.

Papageorgiou explained that this approach ensures the utility provider, the Ceylon Electricity Board (CEB), operates on commercial principles rather than becoming a financial burden on taxpayers. It also promotes stable and predictable electricity pricing, which benefits both consumers and the broader economy.

Addressing concerns about the cost of living, Papageorgiou noted that Sri Lanka’s electricity pricing structure already includes differentiated tariffs based on household income and consumption levels. “Smaller residential consumers pay lower rates, while larger consumers effectively cross-subsidize them,” he said, highlighting the system’s built-in equity.

He further reassured that the IMF program includes provisions to protect the poor and vulnerable, ensuring that reforms do not disproportionately impact low-income households.