Multilateral financial assistance from the International Monetary Fund, Asian Development Bank, and the World Bank is expected to buffer against the potential impact of dwindling foreign reserves as Sri Lanka’s tourism arrivals drop, and debt repayment obligations arise this month, President Anura Kumara Dissanayake said in parliament yesterday (7).
The assistance includes $ 700 million from the IMF, $ 1.2 billion from the ADB, and additional World Bank funding for development projects.
“Through our fruitful discussions with the International Monetary Fund, we are making an effort to get them to sign the staff-level agreement by Thursday locally. Usually we discuss and then sign the staff-level agreement over there. We are making full efforts to receive the staff-level approval with the IMF by Thursday,” the President said, addressing Parliament on the ongoing increase in Government expenditure to subsidise rising energy costs and provide welfare.
“If we receive that approval, we will be able to receive the fifth and sixth disbursements together. Therefore, before the end of May, we may receive $ 700 million for the fifth and sixth installments together,” Dissanayake said, referring to the two reviews that had been combined to accommodate the economic shocks caused by cyclone Ditwah.
“Similarly, the Asian Development Bank’s chairperson and a commissioned team came down, with whom we had lengthy discussions. They have agreed on a $ 1.2 billion allocation for this year, which has been approved. Then with the World Bank we had planned some development projects, for which we have dollar estimates. With the IMF, ADB, and World Bank aid, I think we are likely not to risk facing an issue with regard to lowering foreign exchange reserves.”
By February 2026, Sri Lanka’s gross official reserves reached $ 7.3 billion, driven by worker remittances, tourism earnings, and central bank purchases.
“In January and February, in those two months alone, the CBSL had purchased $ 700 million from the market. Accordingly, our foreign reserves reached $ 7 billion; however, now we have reduced our market purchases,” Dissanayake said.
“Though we have stopped purchases, there is a need to pay off our debt repayments. By the time the repayments are made, there is a possibility that the reserves recorded at the end of February are likely to reduce by May.”
Noting the drop in tourism, Dissanayake also stated: “This also came at the end of our tourist season, and now there is the war, but those who arrive are typically not from the warring region. Therefore, though we expected 300,000 arrivals for the month of March, only 150,000 arrivals were recorded. Now there is a concern about the number of arrivals.”
“However, with the $ 700 million contribution from the IMF and the approved sum from the ADB, I think that we can face the foreign exchange reserves issue.”