The Executive Board of the International Monetary Fund (IMF) has approved emergency financial assistance for Sri Lanka under the Rapid Financing Instrument (RFI), granting the country immediate access to approximately US$206 million. This decision aims to help Sri Lanka address urgent needs arising from the devastating Cyclone Ditwah, while supporting macroeconomic stability.
The disbursement amounts to SDR150.5 million (about US$206 million), equivalent to 26 percent of Sri Lanka’s IMF quota. The funds are intended to help meet urgent balance-of-payments and fiscal pressures following Cyclone Ditwah, which struck the country on November 28 and caused widespread destruction.
Sri Lankan authorities have reaffirmed their commitment to the ongoing economic reform program supported by the Extended Fund Facility (EFF). The cyclone struck as the Fifth Review under the EFF was nearing completion. Due to the need for further assessment of the disaster’s economic impact and consideration of how the IMF-supported program can best assist in recovery and reconstruction, the Fifth Review has been deferred. An IMF mission is scheduled to visit Sri Lanka in early 2026 to resume discussions.
Following the Executive Board’s session, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, issued a statement highlighting the scale of the disaster. “Sri Lanka was hit by a catastrophic cyclone, claiming more than 600 lives and affecting millions more. Flooding and landslides have displaced over 100,000 people, destroyed critical infrastructure, and devastated livelihoods across the country. The disaster has created urgent humanitarian and reconstruction needs, generating significant fiscal pressures and balance-of-payments demands. The emergency financial support provided by the IMF under the RFI will help address these pressures,” he stated.
Mr. Okamura noted that the Sri Lankan government responded swiftly with a package of relief measures, bolstered by strong fiscal performance in 2025. The Central Bank of Sri Lanka is prepared to provide liquidity support to the financial system if necessary.
He added that, while recovery and reconstruction needs are substantial, the authorities remain committed to maintaining fiscal prudence to protect fiscal and debt sustainability. All emergency spending will comply fully with the Public Financial Management Act and will be subject to enhanced monitoring and regular public reporting to ensure transparency and accountability. The Central Bank will continue to refrain from monetary financing of the budget.
The cyclone hit during a period when Sri Lanka was beginning to recover from a severe economic crisis, with the IMF-supported reform program yielding positive results. Adherence to the reform agenda has contributed to economic recovery, price stability, significant revenue-driven fiscal consolidation, and the rebuilding of foreign exchange reserves. However, the economy remains vulnerable and GDP has not yet returned to pre-crisis levels.
The authorities and the IMF team will maintain close engagement and plan to resume discussions at the earliest opportunity. The IMF has reiterated its commitment to supporting Sri Lanka during this challenging period and will continue to assist in the country’s recovery and reconstruction efforts.
