Sri Lanka will not seek additional financial assistance from the International Monetary Fund (IMF) despite recent disaster-related pressures, according to senior Finance Ministry officials, who maintain that the country’s recovery programme remains on track within its existing financial framework.
Ministry of Finance Department of Fiscal Policy Director General Dr. Kapila Senanayake said that the Government had no immediate plans to request further funding, expressing confidence in its ability to manage ongoing challenges under the current arrangement.
“We have already received the latest tranche in December 2025 and at this stage there are no plans to request additional funding. We believe we can manage within the existing framework, although we will continue to monitor developments closely,” he said.
Sri Lanka is currently engaged in discussions with the IMF as part of the ongoing review process under the Extended Fund Facility (EFF) programme. Officials indicated that the Fifth and Sixth Reviews were being conducted in tandem, reflecting both the progress achieved and the need to assess current economic conditions.
“The IMF team has expressed satisfaction with our performance leading up to the Fifth Review, as well as with the current trajectory,” Dr. Senanayake said.
On fiscal policy, the Government has opted to maintain its existing targets for 2026, including adherence to primary expenditure ceilings. Authorities emphasised that built-in flexibility mechanisms within the IMF programme provided sufficient room to absorb external shocks without requiring major policy deviations.
“We are continuing with the existing primary expenditure ceilings and there is no deviation from those targets. The programme already includes flexibility provisions, so we do not see any immediate issues. However, it is still too early to comment in detail, as the IMF will issue an official statement following the review,” he noted.
A key pillar of Sri Lanka’s economic stabilisation has been its comprehensive debt restructuring process. Earlier this year, the Government announced that it had reached agreements with approximately 99% of its external creditors.
Discussions are now ongoing with the remaining creditors, particularly in relation to the restructuring of International Sovereign Bonds (ISBs), which include complex instruments linked to Gross Domestic Product (GDP) performance.
“Negotiations are continuing, and we expect to reach a Memorandum of Understanding with the remaining parties soon. There are only a few outstanding matters to resolve, but discussions are still ongoing, so it would not be appropriate to comment further at this stage,” Dr. Senanayake said.
Structural reforms continue to play a central role in the IMF-supported programme, with particular emphasis on strengthening public financial management and financial sector stability. The implementation of the Public Financial Management Act has been a focal point of recent engagements, alongside ongoing work on the capital recapitalisation plan for the banking sector.
“We have already implemented key aspects of the reforms, although certain regulations still need to be issued. Timelines are in place, and further details will be made public in due course. Progress on these fronts has been satisfactory, but as these discussions are still ongoing, more comprehensive information will be released after the IMF mission concludes,” he said.
As Sri Lanka transitions from crisis response to economic stabilisation, rebuilding foreign reserves remains a critical priority. Gross Official Reserves (GOR) stood at approximately $ 6.8 billion at the beginning of the year, although final targets for year-end reserve levels are still under discussion as part of broader macroeconomic planning.
“We do have reserve targets and these will be published along with the updated macroeconomic framework. Discussions are still ongoing and no final conclusions have been reached yet. Once the process is complete, all relevant figures and projections will be released,” Dr. Senanayake stated.