IMF hails Sri Lanka’s decision to introduce fuel pricing formula

The International Monetary Fund (IMF) has backed Sri Lanka’s decision to introduce a fuel pricing formula.

Gerry Rice of the Communications Department of the IMF told reporters in Washington that the IMF feels the automatic fuel pricing mechanism marks a major step toward completing the energy pricing reforms that are underway in Sri Lanka, and minimizes the fiscal risks.

“If implemented properly, the formula based pricing would eliminate fuel subsidies that benefit the rich rather than the poor. So, we think it would benefit Sri Lanka and the economy,” he said.

The Government recently increased fuel prices in line with the expectations of the International Monetary Fund.

The Government said the price increase will be part of a new price formula which will be followed in future. Finance Minister Mangala Samaraweera had said that fuel prices in Sri Lanka will be revised every two months according to the Platts Singapore benchmark prices.

“This means the price could either increase or decrease.” he had told reporters.

The IMF had said last month that subject to cabinet approval of an automatic fuel pricing mechanism—consistent with the three-year Extended Fund Facility (EFF)-supported program, the IMF Board is expected to consider Sri Lanka’s request for completion of the fourth review in June 2018.

The IMF had said that the measure would represent a major step towards completing energy pricing reforms in 2018.

Gerry Rice confirmed that the Board is scheduled to discuss Sri Lanka’s completion of its fourth review on June 1. (Colombo Gazette)