IMF Disburses $695 Million After Completing Sri Lanka Reviews

2026-05-28 02:15:35

(MENAFN- IANS) Colombo, May 28 (IANS) The International Monetary Fund (IMF) has completed the combined fifth and sixth reviews of Sri Lanka's economic reform program under the Extended Fund Facility (EFF) arrangement, giving the country immediate access to a fund of 695 million US dollars.

The latest disbursement brings total IMF purchases under the arrangement to 2.4 billion US dollars. The 48-month EFF arrangement, approved in March 2023 for about 3 billion US dollars, supports Sri Lanka's program to restore macroeconomic stability, strengthen debt and fiscal sustainability, protect vulnerable groups, rebuild external buffers, reduce governance and corruption vulnerabilities, and advance structural reforms.

The IMF said program performance was generally strong. Sri Lanka met all end-December 2025 quantitative performance criteria, while most structural benchmarks were met or implemented with delays. The prior actions on restoring fuel and electricity cost-recovery pricing were also met, reports Xinhua news agency.

However, the Fund noted that two continuous performance criteria were not observed, namely the requirement to avoid new external payment arrears and the requirement not to impose or intensify import restrictions.

The IMF also warned that the war in the Middle East and the aftermath of Cyclone Ditwah had increased downside risks. It projected Sri Lanka's growth to slow to 3 per cent in 2026, while average inflation is expected to rise to 5 per cent. Higher oil prices could increase inflation and weaken the current account, while lower tourism receipts could further pressure external balances.

IMF Deputy Managing Director and Acting Chair Kenji Okamura said Sri Lanka's reform gains had helped preserve economic resilience and created room to respond to Cyclone Ditwah and the Middle East conflict. He said fiscal easing in 2026 was appropriate in response to the shocks, with the government implementing a temporary relief package and allocating additional spending for recovery and reconstruction.

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