IMF Approves Emergency Funding for Cyclone-Hit Sri Lanka

Colombo: The International Monetary Fund (IMF) has approved 20.6 crore dollars in emergency funding for Sri Lanka under its Rapid Finance Instrument to help the country meet urgent needs following the devastation caused by Cyclone Ditwah and to maintain macroeconomic stability.

The cyclone caused widespread destruction across the island nation and claimed the lives of more than 643 people, leaving behind severe humanitarian and reconstruction challenges. In a statement issued on Friday, the Washington-based IMF said the disaster has created immediate fiscal pressures and balance-of-payments needs for Sri Lanka.

The IMF said the emergency financial assistance would help the government address these pressures and support relief and recovery efforts. It noted that the cyclone struck at a critical time, when the Fifth Review of Sri Lanka’s 290 crore dollars IMF bailout programme was nearing completion.

Given the time required to assess the full economic impact of the cyclone and to determine how the IMF-supported programme can best assist Sri Lanka’s recovery and reconstruction while maintaining agreed policy objectives, the IMF said the Fifth Review has been deferred. An IMF mission team is expected to visit Sri Lanka in early 2026 to resume discussions, the statement said.

Sri Lanka entered into a 48-month Extended Fund Facility (EFF) agreement with the IMF in March 2023, which included a series of stringent economic reforms aimed at restructuring the country’s welfare-oriented governance system. The agreement followed Sri Lanka’s first-ever sovereign default, triggered by an unprecedented economic crisis.

Several hours before the IMF’s announcement, the Sri Lankan Parliament approved, without a vote, a supplementary estimate of 50,000 crore rupees. The government said the additional allocation was required to restore livelihoods and provide relief to those affected by the cyclone.