The government is facing challenges in financing disaster response efforts amid severe fiscal constraints, as the IMF insists that all spending must strictly comply with the Public Finance Management Act (PFMA), the media reports.
In its latest statement, the International Monetary Fund stressed that disaster-recovery expenditure must be transparent and carefully prioritised, warning that deviations could undermine the fiscal discipline achieved under Sri Lanka’s ongoing reform programme.
IMF Mission Chief Evan Papageorgiou said that while Sri Lanka begins rebuilding, authorities remain committed to safeguarding gains in fiscal and debt sustainability, strengthening public investment management through project reprioritisation and effective implementation, and ensuring all spending is carried out transparently in line with the PFMA. He added that the government is also determined to further strengthen social safety nets to protect the poor and vulnerable, who are disproportionately affected by the cyclone.
Despite these constraints, the IMF has assured its fullest cooperation in the rebuilding process. However, the government’s efforts to convene an international donor conference have yet to produce results.
Commenting on the situation, economist Prof. Rohan Samarajeewa said the cyclone has forced the government to make difficult trade-offs between maintaining debt sustainability and addressing urgent disaster-response needs.
He noted that extensive infrastructure damage must be repaired swiftly to prevent the economy from stalling. Although a supplementary estimate has allocated Rs. 250 billion for infrastructure restoration, he said this amount is unlikely to be sufficient to “build back better,” such as reinforcing slopes to prevent recurring landslides and road damage, even as the World Bank-supported Global Rapid Post-Disaster Damage Estimation is still pending.
