📈 IMF Reaches Staff-Level Agreement for US$ 700 Mn Payout

IMF staff and Sri Lankan authorities have reached a staff-level agreement on the combined fifth and sixth reviews under the Extended Fund Facility (EFF). Upon IMF Executive Board approval, Sri Lanka will access approximately US$ 700 Mn in financing. • Macroeconomic Performance The economy grew by 5% YoY in 2025, outperforming expectations. Gross official reserves reached US$ 7 Bn by end-March 2026. Inflation rebounded to 2.2% YoY in March 2026, while fiscal performance remained strong, bolstered by taxes on motor vehicle imports. • External Shocks & Risks The recovery faces headwinds from the Middle East conflict, which has spiked energy prices and disrupted tourism air hubs. Additionally, the economy is addressing infrastructure needs following Cyclone Ditwah. • Key Reform Requirements Board approval is contingent on: (i) Restoring cost-recovery pricing for electricity and fuel. (ii) Completion of financing assurance reviews and progress in debt restructuring. • Structural Priorities Debt restructuring is nearing completion, including the Sri Lankan Airlines debt exchange. Future focus remains on revenue mobilization, anti-corruption through the 2026 government action plan, and modernizing labor legislation to foster inclusive growth.