An IMF delegation led by Mission Chief Evan Papageorgiou has praised Sri Lanka’s economic recovery during the ongoing fifth and sixth reviews under the Extended Fund Facility, while warning that recent stability “remains fragile.”
The review team, on the ground since March 26 and scheduled to conclude by April 9, met with President Anura Kumara Dissanayake at the Presidential Secretariat. The IMF found Sri Lanka has demonstrated “notable resilience despite a challenging global environment” with “measurable progress in stabilising macroeconomic conditions.”
Key indicators
The mission highlighted several positive developments:
- Foreign reserves rebuilt to US$ 7.3 billion by end-February 2026
- Revenue collection improved significantly through policy reforms and better administration
- Economic growth of approximately 5 percent in 2025
- Inflation down to 1.6 percent in early 2026
The delegation noted reserve rebuilding as strengthening confidence and providing “insulation against global shocks.”
External risks flagged
However, the IMF cautioned that emerging geopolitical tensions — particularly the Middle East conflict — pose fresh threats through higher energy prices, supply disruptions, and potential impacts on inflation and the balance of payments.
The government was praised for targeting relief at vulnerable populations rather than introducing broad subsidies, maintaining cost-reflective energy pricing while shielding the most affected.
The review outcomes will determine the next phase of disbursements under the $2.9 billion programme. Board approval remains pending. The timing is significant: the review concludes April 9 — the same day 44 percent Trump tariffs on Sri Lankan exports activate, compounding external pressures the IMF flexibility request sought to address.
