📈 IMF & Sri Lanka Continue Talks for Seventh EFF Review

The International Monetary Fund (IMF) concluded its mission to Sri Lanka (Sept 10–23, 2026) to discuss the Seventh Review of the Extended Fund Facility (EFF) and the 2026 Article IV Consultation. Discussions remain ongoing toward reaching a staff-level agreement. • Macroeconomic Performance: • GDP expanded by 4.2% in 2026Q2 (11 consecutive quarters of growth). • Headline inflation rose to 8% y/y in August due to global oil price shocks. • Gross official reserves reached US$ 6.9 Bn at📈 IMF and Sri Lanka Continue Talks for Seventh EFF Review The International Monetary Fund (IMF) concluded a mission to Sri Lanka from September 10–23, 2026, with discussions ongoing toward a staff-level agreement for the Seventh Review under the Extended Fund Facility (EFF) and the 2026 Article IV Consultation. • Macroeconomic Performance: • GDP grew 4.2% in 2026Q2, marking 11 consecutive quarters of expansion. • Gross official reserves reached US$ 6.9 Bn at end-August 2026. • August headline inflation rose to 8% y/y amid global oil price shocks. • Debt restructuring is largely completed, supported by a strong fiscal outturn in 2026H1. • Key Risks & Challenges: Downside risks persist due to the Middle East war, global trade policy uncertainties, and El Niño impacts. Capital spending bottlenecks remain, particularly for post-cyclone Ditwah recovery. • Policy Recommendations: • Develop a medium-term revenue strategy, broaden the tax base, and maintain cost-recovery energy pricing. • Preserve the 5% inflation target and maintain exchange rate flexibility to absorb shocks. • Avoid proposed legal amendments that could weaken the anti-corruption framework. • Accelerate structural reforms in agriculture, fisheries, tourism, and renewable energy—especially in the Northern Province—to drive inclusive growth.