Following the successful completion of the combined fifth and sixth reviews under the IMF’s Extended Fund Facility (EFF), the Government of Sri Lanka and the Central Bank of Sri Lanka have released the official Letter of Understanding submitted to the International Monetary Fund.
The document, dated May 13, 2026, was signed by President and Finance Minister Anura Kumara Dissanayake and Central Bank Governor Dr. Nandalal Weerasinghe.
The letter outlines Sri Lanka’s progress in restoring macroeconomic stability, strengthening debt sustainability, and continuing structural reforms under the IMF-supported program.
According to the document, Sri Lanka’s economy is projected to record growth of 5 percent in both 2024 and 2025, supported by improved tax revenue collection, foreign reserve accumulation, and progress in debt restructuring.
The government also reaffirmed its commitment to meeting IMF targets despite temporary fiscal pressures created by Cyclone Ditva and the impact of Middle East tensions.
Several key policy commitments were reiterated in the document:
- Continued implementation of cost-reflective pricing mechanisms for fuel and electricity
- Temporary relief measures for households and businesses will remain within fiscal limits
- Subsidy support is expected to be gradually phased out by the end of September 2026
- Welfare assistance will continue to be directed toward vulnerable groups through targeted programs
- Public financial discipline and the sustainability of state institutions will be maintained
Through the letter, Sri Lanka formally requested approval from the IMF Executive Board for the combined reviews and sought the release of approximately US$695 million under the program.
The IMF Executive Board approved the reviews on May 27, 2026, allowing the immediate release of the funds.
With this latest disbursement, total financial support received by Sri Lanka under the IMF program has increased to approximately US$2.4 billion.
