📈 Sri Lanka Secures IMF Staff-Level Agreement for 7th Review under EFF

IMF staff and Sri Lankan authorities reached a staff-level agreement on the 7th Review under the Extended Fund Facility (EFF) and concluded the 2026 Article IV Consultation. • Financial Support & Approval: • Unlocks approx. US$ 345 Mn (SDR 254 Mn) upon IMF Executive Board approval, bringing total disbursements to US$ 2.7 Bn (SDR 2.032 Bn) of the US$ 3 Bn facility. • Board approval is contingent on presenting the 2027 Budget aligned with program parameters and completing financing assurances for debt restructuring. • Economic Performance Indicators: • GDP Growth: Expanded by 4.2% YoY in 2026Q2, marking 11 consecutive quarters of growth. • Inflation: Headline inflation stood at 8% YoY in September 2026. • Reserves: Gross official reserves reached US$ 6.9 Bn at end-August 2026. • Fiscal & Banking: Strong fiscal outturn in 2026H1; banks remain well-capitalized and profitable. • Risks & Policy Recommendations: • Downside risks persist due to Middle East war uncertainties, global trade policy, and El Niño impacts. • Authorities advised to preserve cost-recovery energy pricing, tighten monetary policy if inflation surges, maintain exchange rate flexibility, and advance digital public infrastructure, trade liberalization, and public investment management to accelerate Cyclone Ditwah recovery.