The Executive Board of the International Monetary Fund (IMF) has approved a disbursement of SDR 150.5 million, equivalent to about US$206 million or 26 percent of Sri Lanka’s quota, under the Rapid Financing Instrument (RFI).
This emergency assistance is aimed at addressing urgent balance-of-payments and fiscal pressures arising from the devastating Cyclone Ditwah, which struck Sri Lanka on November 28.
The Sri Lankan authorities have reaffirmed their commitment to the economic reform programme supported by the IMF’s Extended Fund Facility (EFF). However, as the cyclone occurred when the fifth review under the EFF was nearing completion, the review has been deferred to allow time to assess the disaster’s economic impact and determine how the IMF-supported programme can best assist Sri Lanka’s recovery and reconstruction while preserving policy priorities. An IMF mission is expected to visit Sri Lanka in early 2026 to resume discussions.
Following the Executive Board’s decision, IMF Deputy Managing Director and Acting Chair Kenji Okamura said the cyclone claimed more than 600 lives and affected millions, with flooding and landslides displacing over 100,000 people, destroying critical infrastructure and devastating livelihoods. He noted that the disaster has created urgent humanitarian and reconstruction needs, resulting in significant fiscal and balance-of-payments pressures, which the RFI support is intended to help address.
Okamura said the government responded swiftly with a relief package supported by strong fiscal overperformance in 2025, and 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, he emphasised that the authorities remain committed to fiscal prudence to safeguard fiscal and debt sustainability.
He added that all emergency spending will be carried out in full compliance with the Public Financial Management Act and supported by 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 IMF noted that the cyclone struck as Sri Lanka is emerging from a severe economic crisis, with the IMF-supported reform programme under the EFF beginning to yield results, including economic recovery, price stability, improved revenue-based fiscal consolidation and progress in rebuilding foreign exchange reserves. However, the economy remains vulnerable and has yet to return to its pre-crisis GDP levels.
The IMF said it will maintain close engagement with the Sri Lankan authorities and stands with the people of Sri Lanka during this difficult period, reaffirming its continued support for the country’s recovery and reconstruction efforts.
