Colombo, Dec 20: The International Monetary Fund (IMF) has approved US$206 million in emergency financing for Sri Lanka to help the country cope with severe economic pressures triggered by Cyclone Ditwah, which struck the island on November 28.
The IMF Executive Board authorised a disbursement of SDR 150.5 million, equivalent to about 26 percent of Sri Lanka’s IMF quota, under the Rapid Financing Instrument (RFI). The funds are aimed at meeting urgent balance-of-payments and fiscal needs arising from the devastating impact of the cyclone.
In a statement, the IMF said the emergency assistance would support Sri Lanka in addressing humanitarian relief, reconstruction, and external financing pressures, while helping to preserve macroeconomic stability.
Cyclone Ditwah caused widespread destruction across the country, claiming more than 600 lives, displacing over 100,000 people, and damaging critical infrastructure and livelihoods. The disaster has placed significant strain on public finances at a time when Sri Lanka is still recovering from a prolonged economic crisis.
The IMF noted that the cyclone struck as the Fifth Review under Sri Lanka’s Extended Fund Facility (EFF) was nearing completion. However, the review has been deferred to allow sufficient time to assess the full economic impact of the disaster and to determine how the IMF-supported programme can best assist recovery and reconstruction efforts. Discussions under the EFF are expected to resume in early 2026, with an IMF mission scheduled to visit Sri Lanka.
Despite the setback, the IMF said Sri Lankan authorities have reaffirmed their commitment to economic reforms, fiscal discipline, and transparency. Emergency spending related to disaster response will be carried out in line with the Public Financial Management Act, supported by enhanced monitoring and regular public reporting.
Following the Board’s decision, IMF Deputy Managing Director and Acting Chair Kenji Okamura said the emergency financing would help Sri Lanka manage the immediate fallout from the disaster.
“The disaster has created urgent humanitarian and reconstruction needs, generating significant fiscal pressures and balance-of-payments needs,” Okamura said, adding that the IMF “stands with the people of Sri Lanka during this difficult time.”
The IMF said that while recovery and reconstruction needs will be substantial, maintaining fiscal prudence remains critical to safeguarding debt sustainability and supporting the country’s ongoing economic recovery.
