The International Monetary Fund Executive Board has approved an emergency disbursement of SDR150.5 million, roughly equivalent to USD 206 million, to support Sri Lanka through the Rapid Financing Instrument.

This urgent financial assistance is intended to help the nation manage the balance-of-payments and fiscal challenges caused by the devastation of Cyclone Ditwah on 28 November. Although the Fifth Review of the Extended Fund Facility was nearly finished when the storm hit, the IMF has decided to defer the review until early 2026. This delay allows for a comprehensive assessment of the damage and ensures that the recovery efforts align with existing policy priorities.

Kenji Okamura, acting as Deputy Managing Director, stated that the catastrophic cyclone claimed more than 600 lives and displaced over 100,000 people through flooding and landslides. This natural disaster destroyed critical infrastructure and livelihoods just as the country was emerging from a deep economic crisis. While the authorities have already implemented a relief package supported by strong fiscal performance in 2025, the IMF funds are essential to address the resulting humanitarian and reconstruction needs.

The government has confirmed its continued commitment to the broader reform agenda and fiscal prudence to safeguard debt sustainability. All emergency expenditure will be conducted in accordance with the Public Financial Management Act, ensuring high standards of transparency and accountability through regular public reporting. Furthermore, the Central Bank of Sri Lanka will maintain its policy against monetary financing of the budget while remaining prepared to provide liquidity to the financial system if the situation demands it. The IMF mission team expects to return to the country in the new year to continue supporting the recovery process.