IMF highlights 2026 Budget, SOE reforms as key priorities for SL

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Mission Chief for Sri Lanka Evan Papageorgiou says upcoming 2026 Budget critical pillar of EFF
Aims to meet revenue, spending and program targets
Notes more work remains on governance reforms, monetary policy and reserves
Pushes cost-reflective pricing for electricity and fuel
Plans to limit new foreign borrowing by non-financial SOEs
Wants SOEs to publish audited accounts for transparency

International Monetary Fund (IMF) Mission Chief for Sri Lanka Evan Papageorgiou on Thursday noted that the upcoming 2026 Budget discussion will be a critical pillar of the Fund-supported Extended Fund Facility (EFF), as the country continues efforts to stabilise its public finances and sustain reform momentum.

“This (Budget 2026) is a very important part of the program. We will ensure that revenue, expenditure and all the targets are met in accordance with the program as well as the Government’s own objectives,” he told journalists.

In addition to the Budget, he said significant work remains on governance reforms, monetary policy and reserves management. “These elements are well-defined now and we will continue discussions on these fronts,” he added.

Papageorgiou outlined reforms in the State-owned enterprises (SOEs) as another top priority for Sri Lanka. “SOEs and the governance of SOEs in general have been at the forefront of the program. A lot of them are in connection to resolving legacy debt and implementing cost recovery pricing for both electricity and fuel, which essentially would create a better-run set of companies as well as reducing the fiscal risks from the SOEs to the Government, as contingent liabilities get reused,” he pointed out.

The Mission Chief for Sri Lanka acknowledged that they have spoken to this in different terms. “This would mean the cost recovery pricing of energy, electricity, and fuels, as well as containing risk from guarantees to SOES, refraining from new FX borrowing to non-financial SOEs and making SOEs more transparent by publishing their audited financial statements of the 52 largest SOEs,” he elaborated.

Looking ahead, Papageorgiou assured that the IMF is committed to supporting Sri Lanka in advancing these reforms and covering more ground in the coming months. “We look forward to doing more, working more, and covering more ground here,” he said.

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