## IMF Staff Concludes Visit to Sri Lanka

_IMF News, June 30, 2026_

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## Bibliographic details
- Published: June 30, 2026

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### Mission background
- Press Release No. 26/229
- Mission led by Mr. Evan Papageorgiou.
- Visit dates: June 24 to 30.
- Purpose: take stock of recent macroeconomic developments and discuss progress in implementing the economic reform program supported by the IMF’s Extended Fund Facility (EFF) arrangement.
- Meetings held with: His Excellency the President and Finance Minister Anura Kumara Dissanayake; the Honorable Prime Minister Dr. Harini Amarasuriya; Honorable Labor Minister and Deputy Minister of Finance and Planning Prof. Anil Jayantha Fernando; Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe; Secretary to the Treasury Dr. Harshana Suriyapperuma; Senior Economic Advisor to the President Mr. Duminda Hulangamuwa; Chief Advisor to the President on Digital Economy Dr. Hans Wijayasuriya; other senior government and CBSL officials; private sector, civil society organizations, and development partners.

### Recent macroeconomic developments and impacts
- The Middle East war has weighed on Sri Lanka’s economy.
- Headline inflation rose from 1.6 percent y/y in February 2026 to 5.5 percent y/y in May following energy price increases.
- Tourist arrivals growth softened.
- Gross international reserves accumulation decelerated.
- Central Bank response: a 100-basis point policy rate hike and deployment of macroprudential measures.
- Government response: a temporary, on-budget, relief package comprising fuel, electricity, and fertilizer subsidies, as well as cash transfers to the most vulnerable households.
- Recent decline in global commodity prices offers some relief from external pressures, though uncertainty remains high.

### Fiscal policy, public finances, and expenditure execution
- Authorities committed to reverting to the primary balance target of 2.3 percent of GDP in 2027 following fiscal easing in 2026.
- Recommended fiscal actions:
  - Continue efforts to improve tax compliance and broaden the tax base.
  - Enhance public financial management, including preventing the reemergence of expenditure arrears.
  - Resolve bottlenecks to spending execution—including disaster-related support—for effective post-cyclone recovery and reconstruction.
  - Accelerate reform of state-owned enterprises.
  - Maintain cost-recovery energy pricing to minimize fiscal risks.
  - Prioritize adequate targeting and coverage of social safety nets to protect vulnerable families.

### Monetary policy, external adjustment, and financial stability
- Monetary policy guidance:
  - Monetary policy should remain prudent, agile, and data-dependent to safeguard price stability under heightened global uncertainty.
  - Exchange rate flexibility is paramount to support external adjustment in the face of shocks without undermining reserve accumulation.
  - Foreign exchange intervention should be limited to addressing excessive volatility.
  - Balance of payments restrictions should be phased out.
- Financial sector safeguards:
  - Strengthen operational risk, cybersecurity, and AML/CFT safeguards to preserve financial stability.

### Debt management and market access
- Debt restructuring is nearing completion.
- IMF recommendation: accelerate progress toward building capacity of the Public Debt Management Office to:
  - promote prudent debt management practices;
  - deepen domestic debt markets;
  - support Sri Lanka’s eventual return to international capital markets.

### Structural reforms and growth agenda
- Building resilience to shocks and achieving strong, durable, and inclusive growth requires:
  - steadfast implementation of governance reforms;
  - bold reforms to improve the efficiency and fairness of the tax system;
  - liberalization of trade;
  - addressing labor market rigidities;
  - enhancing the business environment to attract investment, create jobs, and bring poverty rates down.

### Program assessment and next steps
- Progress in meeting commitments under the IMF-supported program will be formally assessed in the context of the Seventh Review of the Extended Fund Facility (EFF) arrangement in the upcoming IMF mission in the fall.
- The dates of the mission will be announced in due time.
- The mission noted that the views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

*IMF Communications Department — Press Release dated June 30, 2026*

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## References

- [Sri Lanka and the IMF](http://www.imf.org/external/country/LKA/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2026/06/30/pr26229-sri-lanka-imf-staff-concludes-visit_