The Executive Board of the International Monetary Fund (IMF) has approved a disbursement of SDR 150.5 million (approximately US$206 million, equivalent to 26 percent of Sri Lanka’s quota) under the Rapid Financing Instrument (RFI). This emergency assistance is intended to help Sri Lanka address urgent balance-of-payments and fiscal pressures caused by the catastrophic Cyclone Ditwah, which struck the country on November 28.
Sri Lankan authorities have reaffirmed their commitment to the ongoing economic reform programme supported by the IMF’s Extended Fund Facility (EFF). The cyclone hit at a time when the Fifth Review under the EFF was nearing completion. However, in view of the time required to assess the full economic impact of the disaster and to evaluate how the IMF-supported programme can best assist Sri Lanka’s recovery and reconstruction efforts—while preserving programme objectives and policy priorities—the Fifth Review has been deferred. An IMF mission team is scheduled to visit Sri Lanka in early 2026 to resume discussions.
Following the Executive Board’s deliberations, IMF Deputy Managing Director and Acting Chair, Mr. Kenji Okamura, issued a statement highlighting the severity of the disaster and the need for urgent support.
Sri Lanka was struck by a catastrophic cyclone that claimed more than 600 lives and affected millions of people across the country. Widespread flooding and landslides displaced over 100,000 individuals, destroyed critical infrastructure, and severely disrupted livelihoods nationwide. The disaster has generated urgent humanitarian and reconstruction needs, resulting in significant fiscal pressures and balance-of-payments requirements. The IMF’s emergency financial support under the RFI is expected to help address these immediate challenges.
Mr. Okamura noted that the government responded promptly with a package of relief measures, supported by strong fiscal overperformance in 2025. He added that the Central Bank of Sri Lanka stands ready to provide liquidity support to the financial system if required.
While recovery and reconstruction needs are expected to be substantial, the authorities remain committed to maintaining fiscal prudence to safeguard fiscal and debt sustainability. All emergency expenditures will be carried out in full compliance with the Public Financial Management Act and will be subject to enhanced monitoring and regular public reporting in line with transparency and accountability standards. The Central Bank will also continue to refrain from monetary financing of the budget.
The cyclone struck as Sri Lanka was emerging from a deep economic crisis, at a time when the IMF-supported reform programme under the EFF was beginning to yield positive results. Sustained adherence to the reform agenda has supported a robust economic recovery, improved price stability, significant revenue-based fiscal consolidation, and progress in rebuilding foreign exchange reserves. However, the economy remains vulnerable, and gross domestic product has yet to return to its pre-crisis level.
The IMF and Sri Lankan authorities continue to maintain close engagement and will resume discussions at the earliest possible opportunity. The IMF reaffirmed its support for the people of Sri Lanka during this difficult period and its continued commitment to assisting the country’s recovery and reconstruction efforts.
