IMF Executive Board Approves US$206 Million in Emergency Financial Support for Sri Lanka

COLOMBO (News 1st); The International Monetary Fund (IMF) has stepped in with urgent financial assistance for Sri Lanka, approving a disbursement of US$206 million under its Rapid Financing Instrument (RFI).

The move, announced on Friday (19), comes in response to the catastrophic impact of Cyclone Ditwah, which struck the island on November 28, leaving a trail of destruction and humanitarian crisis.

According to the IMF, the emergency support—equivalent to 26 percent of Sri Lanka’s quota—is aimed at easing severe balance-of-payments and fiscal pressures triggered by the disaster. The cyclone claimed over 600 lives, displaced more than 100,000 people, and caused widespread flooding and landslides that obliterated critical infrastructure and livelihoods.

“The emergency financial support provided by the IMF under the RFI will help address these pressures,” said Kenji Okamura, IMF Deputy Managing Director and Acting Chair, following the Executive Board’s discussion.

The scale of devastation has created urgent humanitarian and reconstruction needs, piling significant fiscal strain on a country that was just beginning to recover from a deep economic crisis. The government has responded with a swift relief package, leveraging strong fiscal overperformance in 2025, while the Central Bank of Sri Lanka stands ready to inject liquidity into the financial system if necessary.

Despite the disaster, authorities have pledged to maintain fiscal prudence and debt sustainability, ensuring all emergency spending complies with the Public Financial Management Act and is subject to enhanced monitoring and public reporting. The Central Bank reaffirmed its commitment to avoid monetary financing of the budget.

The cyclone struck as Sri Lanka was nearing completion of the Fifth Review under the Extended Fund Facility (EFF)—a program credited with stabilizing the economy, restoring price stability, and rebuilding foreign reserves. However, the review has now been deferred to allow time for assessing the economic impact and recalibrating support for recovery and reconstruction. An IMF mission team will visit Sri Lanka in early 2026 to resume discussions.

“The IMF stands with the people of Sri Lanka during this difficult time and will continue to support Sri Lanka’s recovery and reconstruction efforts,” Okamura emphasized.

a