Sri Lanka races against time as IMF considers emergency aid
Sri Lanka’s push for emergency financial assistance has reached a decisive phase with the International Monetary Fund (IMF) preparing to consider the government’s request for Rapid Financing Instrument (RFI) support.
The appeal comes as the country works to stabilise a fragile economy while recovering from severe cyclone devastation heightening the urgency for liquidity, reconstruction funding and balance-of-payments relief.
An IMF spokesperson told the Sunday Times Business that the RFI request is now “the priority at the current juncture,” with the Board meeting expected within the month and the formal date to be announced once confirmed.
Sri Lanka has sought around US$200 million or 26 per cent of its IMF quota to fund humanitarian needs, reconstruction and macroeconomic stability.
Simultaneously, access to about $347 million under the Fifth Review of the Extended Fund Facility (EFF) has been pushed from late 2025 to early 2026 as the Fund evaluates the country’s emergency requirements.
“The Fifth Review under the EFF is postponed to 2026 given the time needed to fully assess the economic impact of the cyclone and evaluate how it can be accommodated within the EFF program,” the spokesperson said.
The 2026 budget will focus on budgetary alignment, reforms relating to electricity costs and support for fiscal discipline.
The IMF will assess its progress based on the quantitative targets set in June, September, and December 2025 within the Fourth Review, and on structural indicators ranging from mid-2025 to early 2026.
The 2026 assessment will concentrate on budget alignment, electricity pricing reforms and adherence to broader fiscal discipline.
While the Fund acknowledges signs of stabilisation, it warns that reform momentum must continue particularly after the December 2025 Board meeting was postponed to accommodate Sri Lanka’s emergency financing request.
The programme sets some of the toughest fiscal and reserve thresholds in recent years. Sri Lanka’s structural reform commitments are equally heavy.
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