IMF RFI support takes priority as the International Monetary Fund considers Sri Lanka’s emergency request following Cyclone Ditwah. The Fifth Review of the Extended Fund Facility is scheduled to resume, ensuring continued financial assistance for the island nation.
IMF advances discussions on Sri Lanka’s Fifth Review and emergency RFI support
The International Monetary Fund (IMF) has confirmed that it will prioritize Sri Lanka’s request for emergency funding under the Rapid Financing Instrument (RFI) amid the aftermath of Cyclone Ditwah. The announcement comes as the global lender plans to resume discussions to complete the Fifth Review of Sri Lanka’s Extended Fund Facility (EFF) in January 2026.
Originally, the IMF Executive Board was set to take up the Fifth Review on December 15, which would have enabled Sri Lanka to receive approximately USD 358 million in support. However, the unprecedented disaster caused by Cyclone Ditwah prompted the Sri Lankan government to request a USD 200 million RFI to provide immediate financial relief to affected regions.
An IMF spokesperson emphasized that the rapid assistance request will take precedence: “In light of the Sri Lankan authorities’ request for emergency financing, IMF Board consideration of the Rapid Financing Instrument (RFI) request is the priority at the current juncture.” This approach highlights the IMF’s flexibility in responding to unforeseen natural disasters, allowing countries to access emergency funds in addition to their ongoing Extended Fund Facility programs.
The IMF has scheduled a team visit to Sri Lanka in early 2026 to resume discussions and complete the Fifth Review of the EFF. The review process evaluates Sri Lanka’s compliance with the economic and fiscal measures agreed upon under the USD 3 billion loan package provided after the 2022 sovereign debt default and economic crisis.
Sri Lanka has made significant progress in fulfilling its EFF commitments, which included fiscal consolidation, debt restructuring, and macroeconomic reforms. Parliament recently approved a circumspect budget for 2026, aligning with IMF parameters and ensuring the country remains on track for continued financial support. However, the additional RFI funding is designed to provide immediate liquidity to address disaster-related expenses, including infrastructure repairs, humanitarian assistance, and economic stabilization efforts.
The IMF’s Rapid Financing Instrument offers a streamlined mechanism for countries facing urgent balance of payments needs without imposing the full conditionality of standard EFF programs. For Sri Lanka, the USD 200 million RFI would complement existing EFF access, allowing the government to respond effectively to both immediate disaster recovery requirements and longer-term fiscal targets.
Cyclone Ditwah has caused widespread disruption across the island, affecting thousands of families and key economic sectors. The government’s RFI request reflects the need for timely external support to mitigate the economic and social consequences of such extreme weather events. Analysts note that this rapid infusion of capital could stabilize liquidity, maintain essential public services, and prevent a deeper economic slowdown in the months ahead.
The Fifth Review of the EFF remains critical for Sri Lanka’s broader economic recovery. The review process assesses adherence to fiscal and structural reforms designed to restore investor confidence, strengthen macroeconomic stability, and prevent future financial crises. Completing the review successfully will ensure continued access to the IMF’s support framework while signaling international confidence in Sri Lanka’s commitment to sound economic management.
By combining emergency RFI support with ongoing EFF oversight, the IMF aims to provide Sri Lanka with both immediate relief and a path toward sustainable recovery. This dual approach underscores the importance of flexible international financing mechanisms in helping countries respond to unexpected shocks while maintaining broader economic stability.
As Sri Lanka navigates the post-Ditwah recovery, the coordination between the government and the IMF will be closely monitored by financial markets and international observers. Effective utilization of RFI funds and timely completion of the Fifth Review will be key indicators of Sri Lanka’s resilience and capacity to manage both natural disasters and economic obligations.