The International Monetary Fund and Sri Lankan authorities have reached a staff-level agreement on economic policies to complete the combined fifth and sixth reviews of Sri Lanka’s reform programme under the Extended Fund Facility.
Once the agreement is approved by the IMF Executive Board, Sri Lanka will have access to about USD 700 million in financing. The IMF noted that ongoing reforms by the authorities have supported economic recovery, with rising reserves, stronger GDP growth, and improved revenue collection exceeding expectations.
However, Sri Lanka remains exposed to external risks, including the Middle East conflict, and the need to recover from the impacts of Cyclone Ditwah. The IMF emphasised that continuing reforms is crucial to maintaining macroeconomic stability and ensuring the economy stays on a path of recovery and inclusive growth.
According to IMF Mission Chief Evan Papageorgiou, the agreement is subject to Executive Board approval, which depends on restoring cost-reflective electricity and fuel pricing while protecting vulnerable groups, as well as completing a financing assurances review.
Sri Lanka’s reform programme, supported by the IMF’s Extended Fund Facility, has already delivered positive results, including economic growth, lower inflation, and improved foreign reserves. Debt restructuring is also progressing, with key milestones such as the SriLankan Airlines debt exchange already completed.
The IMF stressed the importance of continued fiscal discipline, stronger revenue measures, and prudent spending, along with maintaining central bank independence and rebuilding foreign reserves. It also highlighted the need to strengthen governance, accelerate reforms, and enhance resilience to external shocks to ensure sustainable and inclusive long-term growth.
