Sri Lanka will pay approximately 3.275 percent plus surcharges for the $206 million Rapid Finance Instrument (RFI) loan, according to Evan Papageorgiou, IMF Mission Chief for Sri Lanka.
Concerns have been raised locally regarding the cost of the RFI loan, with some questioning whether it is more expensive compared to other commercial borrowing options.
The RFI, approved on December 19, includes a grace period of three and a quarter years and is repayable over a further five-year period. Papageorgiou explained, “The basic rate of charge right now, which is determined weekly, stands at 3.274 percent for the week of December 15th to 21st. This is the SDR interest rate plus a fixed margin, which is standard for every member.” He added, “This number is already very low. There are surcharges on top of that, but they only apply after a certain period and are level-based.”
The surcharges depend on the level of access relative to Sri Lanka’s IMF quota and may rise to 200 basis points in some cases.
Currently, Sri Lanka is receiving new disbursements from the Extended Fund Facility (EFF) following a currency crisis and sovereign default triggered by rate cuts in 2020. The country is also steadily repaying the loan obtained after the 2015 currency crisis.
Sri Lanka is accessing the RFI without any specific conditions. Papageorgiou noted that, while prior actions are usually required, the IMF’s familiarity with Sri Lanka’s ongoing program allowed the RFI to be disbursed without such requirements.
The RFI approval followed a cyclone that struck Sri Lanka on November 26, leaving more than 800 people dead or missing and inundating large areas. The RFI was approved on December 19 to help address the aftermath of the disaster.
Sri Lanka will now need to renegotiate economic policies and targets under the IMF program, with an IMF team scheduled to arrive in January. In the interim, the country will continue to have access to IMF funds.
“What I can tell you about this $206 million disbursement from the Rapid Finance Instrument is that it will not undermine Sri Lanka’s good progress toward debt sustainability,” Papageorgiou stated. “It will increase Sri Lanka’s IMF credit commitment by a relatively small amount—26 percent of quota, or roughly $200 million, which is about 0.2 percent of GDP. This is a very small amount.”
Papageorgiou emphasized the RFI’s catalytic effect, noting that it enables Sri Lankan authorities to augment their response and provides quick access to additional financing from the IMF, other development partners, and bilateral donors.
The RFI funds will be directed to the Treasury, similar to the EFF arrangement. President Anura Kumara Dissanayake informed parliament on Friday that Sri Lanka expects $500 million in support from the IMF and other international partners, including the World Bank and Asian Development Bank.
(Colombo/Dec19/2025)
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