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For IMF clearance, electricity tariff revision should cover Rs. 25bn loss
View(s):By Damith Wickremasekara
The Government would have to revise electricity tariffs in a way that covers a Rs 25 billion loss before obtaining clearance from the International Monetary Fund (IMF) for the implementation of the new tariffs, a senior Treasury official said.
He said the next review of the IMF is due in July, but the proposals should be sent by next month.
The staff-level agreement with the IMF is contingent on two conditions, and one of them is the implementation of prior actions relating to restoring electricity cost-recovery pricing and ensuring proper function of the automatic electricity price adjustment mechanism.
Only after the conditions and approval from the IMF Executive Board, Sri Lanka will unlock about USD $344 million in financing.
He said failure to submit the proposals in time would result in a delay in implementing the IMF programme, and it could have a multitude of other issues, such as obtaining loans from other countries, and will have an impact on credit lines.
In addition, the ratings from other agencies could drop, and this would have an impact on the investments coming into the country.
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