The $ 695 million (m) disbursement to Sri Lanka under the International Monetary Fund’s (IMF) Extended Fund Facility programme has been credited to the Treasury, confirmed yesterday (3). Sri Lanka received the disbursement following the completion of the Fifth and the Sixth reviews of the IMF Extended Fund Facility.

Last week, the Executive Board of the IMF completed the combined Fifth and Sixth Reviews of Sri Lanka’s economic reform programme supported by the 48-month Extended Fund Facility. Completion of the combined reviews provides $ 695 m, bringing the total purchases under the arrangement to SDR 1.778 billion (b) (about $ 2.4 b).

The EFF arrangement for Sri Lanka was approved by the Executive Board on March 20, 2023 in an amount of SDR 2.286 b (395% of quota or about $ 3 b).

The arrangement supports Sri Lanka’s reform programme to durably restore macroeconomic stability by restoring fiscal and debt sustainability while protecting the vulnerable, safeguarding price and financial sector stability, rebuilding external buffers, strengthening governance and reducing corruption vulnerabilities and advancing growth-oriented structural reforms.

Following the Executive Board’s discussion, Deputy Managing Director and Acting Chair Kenji Okamura said: “Sri Lanka’s strong implementation under the EFF arrangement has continued despite challenging circumstances. Gains from the economic reform programme helped preserve economic resilience and provided room to respond to cyclone Ditwah and the Middle East war.”

The Middle East war, however, has significantly worsened Sri Lanka’s economic outlook and tilted risks to the downside, Okamura noted.

He added: “for 2026, growth is projected to slow down to 3%. Higher oil prices would increase inflation and weaken the current account, which would also be adversely impacted by lower tourism receipts. The uncertainty, regarding the war’s intensity and duration, heightens risks to the outlook.”