🚨 IMF Visit Sparked by Climate Crisis Amid Policy Backlash 📉

IMF Managing Director Kristalina Georgieva concluded a high-profile visit to Sri Lanka (Feb 16-18) to assess the devastation from Cyclone Ditwah. While the IMF frames the visit as recovery support, local collectives are calling for "debt justice" as the country faces a 35-year low in human development. • Cyclone Impact & Relief World Bank estimates direct physical damage at US$ 4.1 Bn (approx. 4% of GDP). The NPP government allocated LKR 500 Bn for relief, but critics argue IMF-mandated fiscal constraints prevent a meaningful recovery for the agriculture and SME sectors. • Fiscal Pressures (2025) Interest payments on debt reached 8.9% of GDP, nearly five times the combined health and education budget. VAT at 18% continues to squeeze household budgets, with new levies on school supplies reportedly driving up dropout rates. Over 1 million households have been disconnected from the electricity grid due to cost-reflective pricing. • Debt Restructuring "Time Bomb" The 2024 debt deal is criticized for protecting foreign creditors while "weaponizing" worker pension funds. A critical juncture is expected after 2027, when Macro-Linked Bonds (MLBs) begin imposing higher costs if the economy recovers, potentially triggering a new cycle of austerity. • Sector Outlook Agriculture: US$ 814 Mn in damages to crops and livestock. Infrastructure: Highest loss at US$ 1.73 Bn, disrupting connectivity. Digital Economy: 18% VAT on digital services set to take effect April 2026. _Summary based on provisional disaster assessments and 2025-2026 economic data._