IMF Executive Board Completes the Combined Fifth and Sixth Reviews Under the Extended Fund Facility for Sri Lanka

IMF News, May 27, 2026

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Canonical URL: IMF Executive Board Completes the Combined Fifth and Sixth Reviews Under the Extended Fund Facility for Sri Lanka

The Executive Board completed the combined Fifth and Sixth Reviews of Sri Lanka’s economic reform program under the 48-month Extended Fund Facility (EFF) arrangement.
Immediate access provided: SDR508 million (about US$695 million).
Total purchases under the arrangement following this completion: SDR1.778 billion (about US$2.4 billion).
Original EFF approval: March 20, 2023, in an amount of SDR 2.286 billion (395 percent of quota or about US$3 billion).

Overall assessment: Performance under the program was generally strong.
Prior actions: Restoring fuel and electricity cost-recovery pricing were met.
Continuous performance criteria not observed: no new external payment arrears; not imposing or intensifying import restrictions.
Quantitative performance criteria: All end-December 2025 quantitative performance criteria were met.
Structural benchmarks: Most were met or implemented with a delay.
Remaining implementation priorities: complete public financial and investment management reforms, and electricity sector reforms.
Debt restructuring: nearing completion, but debt sustainability risks remain high.

Near-term shocks noted: the war in the Middle East and the aftermath of Cyclone Ditwah pose downside risks.
Program gains: Enabled swift policy responses to support the economy and protect the vulnerable.
IMF statement highlights:
- For 2026, growth is projected to slow to 3 percent.
- Higher oil prices would increase inflation and weaken the current account; lower tourism receipts would also adversely impact the current account.
- Uncertainty over the war’s intensity and duration heightens risks to the outlook.
- Fiscal easing in 2026 is appropriate in response to the shocks; the government is implementing a temporary relief package and allocating additional spending for recovery and reconstruction following Cyclone Ditwah.
- From 2027 onward, authorities commit to reverting to the primary balance target of 2.3 percent of GDP and complying with the primary expenditure ceiling.
- Monetary policy should continue prioritizing price stability.
- Greater exchange rate flexibility and gradually phasing out balance-of-payments measures are critical to rebuild external buffers and resilience.
- Well-calibrated structural reforms and renewed public infrastructure are needed to improve the investment climate and lift growth potential.

Gross official reserves (end of period)
- In millions of U.S. dollars: 2025 Act. 6,838; 2026 8,645; 2027 11,779; 2028 13,939
- In months of prospective imports of goods & services: 2025 Act. 3.9; 2026 5.1; 2027 5.7
- In percent of ARA composite metric: 2025 Act. 59.4; 2026 73.6; 2027 110.8
- Gross official reserves accounting for PBOC Swap conditions (end of period) 4/: 2025 Act. 5,395; 2026 2.4; 2027 46.9

External debt (public and private) 4/
- In billions of U.S. dollars: 2025 Act. 54.8; 2026 56.7; 2027 58.9; 2028 60.2
- As a percent of GDP: 2025 Act. 50.3; 2026 51.7; 2027 52.7; 2028 51.2

Memorandum items:
- Nominal GDP (in billions of rupees): 2025 Act. 32,751; 2026 35,835; 2027 38,891; 2028 42,089
- Exchange Rate (period average): 2025 Act. 300.9; 2026 …
- Exchange Rate (end of period): 2025 Act. 310.0

Source: IMF Press Release No. 26/172 (May 27, 2026).