The Executive Board of the International Monetary Fund (IMF) has approved a disbursement of SDR 150.5 million (approximately US$206 million, equivalent to 26 percent of Sri Lanka’s quota) under the Rapid Financing Instrument (RFI) to support Sri Lanka following the devastating impact of Cyclone Ditwah.
In a statement, the IMF said the emergency assistance will help Sri Lanka address urgent balance-of-payments and fiscal pressures caused by the cyclone, which struck the country on November 28.
Sri Lankan authorities have reaffirmed their commitment to the ongoing economic reform programme supported by the Extended Fund Facility (EFF). The cyclone occurred as the Fifth Review under the EFF was nearing completion.
However, given the time required to assess the full economic impact of the disaster and determine how the IMF-supported programme can best assist Sri Lanka’s recovery and reconstruction while preserving policy objectives, the Fifth Review has been deferred. An IMF mission is expected to visit Sri Lanka in early 2026 to resume discussions.
Following the Executive Board meeting, Kenji Okamura, IMF Deputy Managing Director and Acting Chair, said the cyclone claimed more than 600 lives and affected millions of people across the country.
“Flooding and landslides have displaced over 100,000 people, destroyed critical infrastructure, and devastated livelihoods,” he said. “The disaster has generated urgent humanitarian and reconstruction needs, placing significant pressure on public finances and the balance of payments.”
Okamura noted that the IMF’s emergency financing under the RFI will help Sri Lanka meet these immediate needs. He also commended the government’s swift response, including a package of relief measures supported by strong fiscal overperformance in 2025. The Central Bank of Sri Lanka stands ready to provide liquidity support to the financial system if necessary.
While acknowledging that recovery and reconstruction will require substantial resources, the IMF said the authorities remain committed to fiscal prudence to safeguard fiscal and debt sustainability. All emergency spending will be carried out in full compliance with the Public Financial Management Act, supported by enhanced monitoring and regular public reporting in line with transparency and accountability standards. The Central Bank will 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 deliver results. Continued adherence to reforms has contributed to economic recovery, price stability, revenue-based fiscal consolidation, and progress in rebuilding foreign exchange reserves. However, the IMF cautioned that the economy remains vulnerable and that GDP has yet to return to pre-crisis levels.
