Press Release No. 25/436

Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved a disbursement of SDR150.5 million (about US$206 million, equivalent to 26 percent of quota) for Sri Lanka under the Rapid Financing Instrument (RFI). This emergency support will help address urgent balance-of-payments and fiscal pressures arising from the catastrophic Cyclone Ditwah, which hit the country on November 28.

The Sri Lankan authorities remain committed to their economic reform program supported by the Extended Fund Facility (EFF). The cyclone hit when the Fifth Review under the EFF was nearing completion. Given the time needed to assess the economic impact of the cyclone and examine how IMF-supported program can best support Sri Lanka’s recovery and reconstruction efforts while preserving objectives and policy priorities, the Fifth Review has been deferred. An IMF mission team will visit Sri Lanka in early 2026 to resume discussions.

Following the Executive Board’s discussion, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, issued the following statement:

Sri Lanka was hit by a catastrophic cyclone, claiming more than 600 lives and affecting millions more. Flooding and landslides have displaced more than 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 needs. The emergency financial support provided by the IMF under the RFI will help address these pressures. 

“The government responded swiftly with 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 needed.

“While recovery and reconstruction needs will be substantial, the authorities remain committed to maintaining fiscal prudence to safeguard fiscal and debt sustainability. All emergency spending will be executed in full compliance with the Public Financial Management Act and 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 cyclone struck as Sri Lanka is emerging from a deep economic crisis and the IMF-supported reform program under the EFF is bearing fruit. Sustained adherence to the reform agenda has underpinned a robust economic recovery, price stability, substantial revenue-based fiscal consolidation, and progress rebuilding foreign exchange reserves. Nonetheless, the economy remains vulnerable and GDP has not recovered to its pre-crisis level.

“The authorities and IMF team maintain close engagement and will resume discussions at the earliest possible juncture. The IMF stands with the people of Sri Lanka during this difficult time and will continue to support Sri Lanka’s recovery and reconstruction efforts

 

Sri Lanka: Selected Economic Indicators 2024-2027

2024   2025 2026 2027     Act.   Projections               GDP and inflation (in percent)             Real GDP   5.0   4.2 2.9 3.1 Inflation (average) 1/   1.2   -0.3 5.4 5.0 Inflation (end-of-period) 1/   -1.5   2.8 5.7 5.2 GDP Deflator growth   3.8   2.2 5.4 5.0 Nominal GDP growth   9.0   6.4 8.5 8.2           Savings and investment (in percent of GDP)           National savings 2/   28.7   25.5 23.2 23.3   Government   -3.0   -1.2 -0.6 0.1   Private   31.7   26.7 23.8 23.1 National investment   27.0   24.9 23.6 23.2   Government   5.0   4.8 5.4 4.8   Private   21.9   20.1 18.2 18.3 Savings-Investment balance   1.8   0.6 -0.4 0.1   Government   -8.0   -6.0 -6.0 -4.7   Private   9.8   6.6 5.6 4.8           Public finance (in percent of GDP)           Revenue and grants   13.7   16.0 15.2 15.2 Expenditure   19.1   20.3 20.0 19.0 Primary balance   2.2   3.4 2.0 2.3 Central government balance   -5.4   -4.3 -4.8 -3.7 Central government gross financing needs   21.9   21.6 19.8 14.8 Central government debt   100.8   99.8 100.6 97.9 Public debt 3/   105.7   104.1 104.6 101.3             Money and credit (percent change, end of period)             Reserve money   15.8   15.8 6.6 8.2 Broad money   8.6   12.0 12.5 8.2 Domestic credit   4.0   12.2 8.2 5.6 Credit to private sector   10.7   22.3 12.2 9.3 Credit to private sector (adjusted for inflation)   9.5   22.6 6.7 4.3 Credit to central government and public corporations   -1.4   3.1 3.9 1.2             Balance of Payments (in millions of U.S. dollars)             Exports   12,772   13,231 13,382 14,181 Imports   -18,841   -21,281 -22,664 -23,291 Current account balance   1,733   604 -386 107 Current account balance (in percent of GDP)   1.8   0.6 -0.4 0.1 Current account balance net of interest (in percent of GDP)   3.7   2.6 1.5 2.1 Export value growth (percent)   7.2   3.6 1.1 6.0 Import value growth (percent)   12.1   12.9 6.5 2.8               Gross official reserves (end of period)             In millions of U.S. dollars   6,122   6,550 8,884 13,371 In months of prospective imports of goods & services   3.0   3.0 3.9 5.6 In percent of ARA composite metric   50.5   53.1 70.4 100.0 Gross official reserves accounting for PBOC Swap conditions (end of period) 4/             In millions of U.S. dollars   4,716   5,144 8,884 13,371 In months of prospective imports of goods & services   2.3   2.3 3.9 5.6 In percent of ARA composite metric   38.9   41.7 70.4 100.0 External debt (public and private) 5/             In billions of U.S. dollars   57.1   53.4 55.6 59.5 As a percent of GDP   57.7   50.6 52.3 54.8             Memorandum items:             Nominal GDP (in billions of rupees)   29,899   31,819 34,512 37,351 Exchange Rate (period average)   302.0   … … … Exchange Rate (end of period)   293.0   … … … Sources: Data provided by the Sri Lankan authorities; and IMF staff estimates. 1/ Colombo CPI. 2/ Cash basis, excluding accrued but not paid interest. 3/ Comprising central government debt, publicly guaranteed debt, and CBSL external liabilities (i.e., Fund credit outstanding and international currency swap arrangements). The debt statistics currently assume the external debt restructuring to have been completed at end 2023. 4/ PBOC swap ($1.4bn based on valuation in 2024) becomes available once the GIR without it is above 3 months of the previous year's imports of goods and services. 5/ Based on market value when available.