Sri Lanka should plan for an 18th IMF programme as the compounding shocks of Cyclone Ditwah and the West Asia war make further IMF engagement increasingly inevitable, economist Ganeshan Wignaraja told the Regional Centre for Strategic Studies (RCSS) Strategic Dialogue in Colombo, EconomyNext reported.
The current programme ends in mid-2027 and significant debt repayments fall due from 2028, Wignaraja said. “Planning for it is the responsible course of action,” he told the dialogue on “A Global Economy in the Shadow of Middle-East War: Implications for Sri Lanka’s Debt Recovery.” Dr Wignaraja is a visiting Senior Research Fellow at ODI Global, London (formerly Overseas Development Institute), and a Professorial Fellow at Gateway House in Mumbai.
Drawing on the IMF’s April 2026 World Economic Outlook — which projects global growth slowing to 3.1% in 2026 — he said the country has moved “from being treated by the IMF as a post-2022 ‘poster child’ of stabilisation” to being hit simultaneously by rising oil, gas and fertiliser prices, disrupted remittances, airline and tourism disruptions, and a contraction in exports. Tea exports, roughly 20% of which go to the Middle East, are particularly exposed.
Two scenarios were outlined. In the best case, the Strait of Hormuz remains open, oil holds in the US$78-90 per barrel range, inflation stays low and growth runs 2.7-4%. In a more likely moderate case, sustained disruption pushes oil above $100, inflation rises to 5.6-6.3%, growth slows to 2.4-3.5%, poverty rises and public finances come under strain — a path Sri Lanka appears to be tracking. A third, prolonged-war scenario, could be “much worse.”
Wignaraja said the IMF is not the problem; in 2022, with reserves effectively exhausted, it was the only lifeline. The deeper failure, he argued, is domestic: a culture of non-implementation, weak state capacity, the absence of strategic decision-making, and recent governance failures including the Treasury cyber breach and the NDB bank fraud case. Climate finance could at best mobilise $500 million, falling critically short of debt obligations.
He also flagged opportunity: as Gulf states lose safe-haven status, Sri Lanka could position itself as an Indian Ocean hub for maritime trade, aviation, finance and professional services — if regulatory, governance and infrastructure capacity is built now.
The intervention comes ahead of the IMF Executive Board’s 27 May decision on Sri Lanka’s fifth and sixth reviews, with a $700 million tranche on the line.
