The International Monetary Fund (IMF) has reaffirmed that it remains a steadfast partner to Sri Lanka, pledging continued support to help transform the country’s recovery into long-term and inclusive prosperity.
The assurance comes as Sri Lanka moves closer to completing its four-year, $3 billion Extended Fund Facility (EFF) programme by mid-next year, with the country making significant progress in stabilising its economy despite major domestic and global challenges.
IMF mission team lead Evan Papageorgiou said Sri Lanka has made “impressive progress” in restoring economic stability following the 2022 crisis, when the economy contracted sharply and inflation surged to nearly 70%.
He noted that economic growth has rebounded to around 5% in 2025, inflation has fallen to low single digits, and government revenue has significantly improved due to major tax reforms and stronger compliance measures.
Papageorgiou also highlighted that Sri Lanka’s public finances are being strengthened through ongoing debt restructuring, while foreign exchange reserves have risen to $7.3 billion by early 2026, providing a stronger buffer against external shocks.
He added that these improvements reflect the government’s commitment to difficult but necessary reforms, even amid challenges such as Cyclone Ditwah and global geopolitical tensions that have affected trade, tourism, and remittances.
The IMF further stressed the importance of continuing reforms and building stronger financial buffers, including maintaining fiscal discipline, improving tax administration, and enhancing social protection systems to support vulnerable groups.
According to Papageorgiou, Sri Lanka’s long-term resilience will depend on sustained structural reforms that improve investment conditions, diversify the economy, and strengthen public financial management.
He also stated that while the current 5% inflation target has helped anchor expectations, it is too early to determine whether it should be revised, as any change must be based on careful analysis and economic conditions.
The IMF encouraged continued progress in areas such as state-owned enterprise reforms, public investment planning, and strengthening transparency in governance and procurement systems.
Looking ahead, the Fund emphasised that even after the EFF programme concludes, engagement with Sri Lanka will continue through regular consultations and technical support.
The IMF reiterated that it remains committed to helping Sri Lanka consolidate its gains and achieve lasting economic stability and prosperity for all its citizens.
