IMF approves $206 mn emergency funding for cyclone-hit Sri Lanka's recovery

The IMF has approved an emergency funding of USD 206 million under its rapid finance instrument to help Sri Lanka address the urgent needs arising from the catastrophic Cyclone Ditwah and preserve macroeconomic stability.

The cyclone caused widespread destruction in the island nation and left over 643 people dead.

In a statement issued on Friday, the Washington-based International Monetary Fund (IMF) said the disaster has created urgent humanitarian and reconstruction needs, generating significant fiscal pressures and balance-of-payments needs.

The emergency financial support provided by the IMF under the rapid finance instrument will help address these pressures, it said.

The IMF added that the cyclone devastation hit when the Fifth Review of Sri Lanka's USD 2.9 billion bailout was nearing completion.

Given the time needed to assess the economic impact of the cyclone and examine how an IMF-supported programme can best support Sri Lanka's recovery and reconstruction efforts while preserving objectives and policy priorities, the Fifth Review has been deferred," it said.

"An IMF mission team will visit Sri Lanka in early 2026 to resume discussions, it added.

The 48-month extended fund facility deal with the IMF in March 2023 carried hard reforms to Sri Lanka's welfare-based governance.

It was signed after Sri Lanka plunged into an unprecedented economic meltdown with its first-ever sovereign default.

Several hours before the IMF decision, the parliament here approved without a vote a supplementary estimate of LKR 500 billion, which the government said was required to restore the livelihoods of those affected by the disaster.