Sri Lanka IMF Seventh Review discussions remain underway after the mission ended without a staff-level agreement, with talks set to continue.
COLOMBO — Sri Lanka’s talks with the International Monetary Fund over the Seventh Review of the Extended Fund Facility have not collapsed despite the IMF mission ending without an immediate staff-level agreement, with discussions set to continue on the outstanding issues.
The IMF mission’s departure has prompted claims in some quarters that the programme has encountered difficulties because a staff-level agreement was not reached during the visit. However, the review remains underway, with further discussions expected as the two sides work towards agreement.
The IMF team focused on Sri Lanka’s recent macroeconomic performance, progress in implementing economic and financial policies under the EFF, and issues connected with the 2026 Article IV Consultation.
The IMF confirmed at the end of its September 10-23 visit that discussions with the Sri Lankan authorities had been “productive” and would continue in the near term with the aim of reaching agreement on the policies and parameters needed to conclude the Seventh Review.
Technical Discussions to Continue
Deputy Minister of Finance and Planning Prof. Anil Jayantha Fernando has said the discussions were based on technical assessments.
Although the IMF officials have returned to Washington, the remaining technical matters can continue to be addressed remotely, according to the supplied report. Pasted text
The absence of a staff-level agreement at the end of the mission therefore does not, by itself, mean the EFF programme has collapsed.
The IMF’s September 23 statement supports that distinction. It said discussions were continuing “with the goal of reaching staff-level agreement in the near term” to pave the way for timely completion of the Seventh Review.
The Fund also reaffirmed its commitment to continue supporting Sri Lanka.
From Stabilisation to Transformation
Economic policy discussions are increasingly focused on moving Sri Lanka beyond crisis stabilisation towards longer-term structural reform.
A medium-term revenue strategy remains one of the priorities. The aim is to sustain government revenue while improving the efficiency and fairness of the tax system and reducing vulnerabilities in public finances.
Energy pricing is another important area.
The IMF has called for continued cost-recovery energy pricing to minimise fiscal risks arising from state-owned enterprises, while also identifying capital investment, financial stability and structural reforms as important areas for the country’s economic programme.
Governance and anti-corruption reforms remain part of that agenda. The IMF said preserving the integrity of the anti-corruption legislative framework was critical to strengthening public trust.
Sri Lanka’s economy has continued to show resilience, but risks remain. According to the IMF, economic activity expanded by 4.2% year-on-year in the second quarter of 2026, while gross official reserves reached US$6.9 billion by the end of August. Headline inflation, however, rose to 8% in August amid the global oil price shock.
External uncertainty, energy-price volatility and the effects of El Niño are among the risks identified by the Fund.
The immediate task is now to resolve the outstanding policy and technical matters required for a staff-level agreement. Until that process is completed, the Seventh Review remains unfinished, but the IMF’s latest official statement makes clear that discussions with Sri Lanka are continuing.
