As Sri Lanka grapples with the economic fallout of Cyclone Ditwah, the IMF steps in with urgent funding to stabilize finances and support recovery.
The Executive Board of the International Monetary Fund has approved emergency financial assistance amounting to US$206 million for Sri Lanka under its Rapid Financing Facility, providing immediate relief as the country confronts severe economic pressures triggered by Cyclone Ditwah.
The approved disbursement totals SDR 150.5 million, equivalent to about 26 percent of Sri Lanka’s IMF quota. According to the IMF, this emergency funding is aimed at addressing urgent balance of payments needs and easing financial stress caused by the widespread destruction left behind by the cyclone.
In a statement, the IMF emphasized that Cyclone Ditwah struck Sri Lanka at a particularly sensitive moment, just as the fifth review of the country’s Extended Fund Facility program was nearing completion. Despite the setback, the Fund noted that Sri Lankan authorities remain committed to the ongoing economic reform agenda supported by the EFF.
The IMF explained that the fifth review has been postponed to allow sufficient time to properly assess the economic impact of the cyclone. This pause will also enable both sides to evaluate how the IMF-supported reform program can be adjusted to support reconstruction and recovery efforts, while still preserving its core objectives and policy priorities.
“The authorities and the IMF team will remain in close contact and will resume discussions as soon as possible,” the IMF said, reaffirming its support. The Fund added, “The IMF stands with the people of Sri Lanka during this difficult time and will continue to support Sri Lanka’s reform and reconstruction efforts.”
As part of this continued engagement, the International Monetary Fund announced that an IMF mission is expected to visit Sri Lanka in early 2026 to resume formal discussions on the reform program and the delayed fifth review.
Sri Lanka formally requested urgent financial assistance of approximately US$200 million following the devastation caused by Cyclone Ditwah. The IMF confirmed that this request was made to help stabilize the economy, protect foreign reserves, and meet immediate external financing needs during the recovery phase.
IMF staff and Sri Lankan authorities had previously reached a staff-level agreement on economic policies on October 9, following discussions linked to the fifth review of the Extended Fund Facility. However, the cyclone’s sudden impact necessitated a reassessment of timelines and priorities.
The emergency funding is expected to provide short-term relief, helping Sri Lanka manage external shocks, maintain essential imports, and support rebuilding efforts in cyclone-affected areas. While the assistance does not replace long-term reforms, it offers critical breathing space as the country works to restore economic stability amid natural disaster recovery.
