IMF and Sri Lanka Reach Agreement for $345 Million

The International Monetary Fund and Sri Lankan authorities reached a staff-level agreement on October 5 to complete the seventh review of the country's economic recovery program. The agreement follows a brief delay announced on October 3, when IMF Resident Representative Martha Tesfaye Woldemichael stated that further consultations were required before the review could be formally concluded.

Pending approval from the IMF Executive Board, the deal will unlock approximately $345 million in financing, bringing total support under the Extended Fund Facility to about $2.7 billion. Final approval depends on the Minister of Finance presenting the 2027 Budget to Parliament according to program parameters and the completion of a financing assurances review regarding debt restructuring.

IMF Mission Chief Evan Papageorgiou noted that the economy grew by 4.2 percent in the second quarter of 2026, with official reserves reaching $6.9 billion by late August. Despite this progress, the IMF warned of risks from global trade policy, El Niño, and conflict in the Middle East. The Fund urged the government to allow domestic fuel prices to adjust with international rates while utilizing targeted cash transfers to protect vulnerable populations.