Colombo – The International Monetary Fund (IMF) Executive Board approved a disbursement of approximately $206 million (SDR 150.5 million, equivalent to 26% of Sri Lanka's quota) under the Rapid Financing Instrument (RFI) on Friday, December 19, 2025. This emergency funding aims to alleviate urgent balance-of-payments and fiscal pressures caused by the catastrophic Cyclone Ditwah, which struck the island nation on November 28, 2025.
The cyclone, one of the deadliest natural disasters in Sri Lanka since the 2004 Indian Ocean tsunami, has claimed 643 lives, with 183 people still reported missing as of mid-December. It triggered widespread flooding, landslides, and infrastructure damage, affecting millions and displacing over 100,000 residents. Preliminary estimates suggest economic losses exceeding $1.6 billion, with some projections reaching $6-7 billion.
IMF Deputy Managing Director Kenji Okamura, acting as chair, stated: "The disaster has created urgent humanitarian and reconstruction needs, generating significant fiscal pressures and balance-of-payments needs. The emergency financial support provided by the IMF under the RFI will help address these pressures." He commended the government's swift relief response, supported by strong fiscal performance in 2025, and noted that all emergency spending will comply fully with the Public Financial Management Act, including enhanced monitoring and public reporting for transparency.
The funding comes as Sri Lanka continues recovering from its 2022 economic crisis. The cyclone interrupted the nearing completion of the Fifth Review under the existing $2.9 billion Extended Fund Facility (EFF). The IMF deferred this review to early 2026, allowing time to assess the disaster's full impact and integrate recovery efforts into the reform program while maintaining key objectives.
Sri Lankan authorities have reaffirmed commitment to the EFF-supported reforms, which have driven economic stabilization and growth. The Central Bank of Sri Lanka stands ready to provide liquidity support if needed, without resorting to monetary financing of the budget.
Domestically, the Sri Lankan parliament approved a supplementary estimate of LKR 500 billion (approximately $1.64 billion at current exchange rates) on December 19, 2025, without a vote. This allocation funds immediate relief, livelihood restoration, and reconstruction across affected areas. President Anura Kumara Dissanayake described the cyclone as the "largest and most challenging natural disaster" in recent history, mobilizing national resources including a Treasury cash buffer exceeding LKR 1,200 billion.
The cyclone's impact was exacerbated by its unusual path and prolonged heavy rainfall, dumping extreme volumes over the Central Highlands and other regions. Kandy district alone recorded 237 deaths, highlighting vulnerabilities in ecologically sensitive areas. Flooding submerged homes, destroyed crops, damaged railways in 91 places and 73 bridges, and disrupted power and water supply for millions.
International support has poured in, including humanitarian aid from India (Operation Sagar Bandhu), the World Bank (re-purposing $120 million), and others. The UN and partners activated coordinated responses, with assessments ongoing.
The RFI disbursement provides rapid, low-conditionality assistance for urgent shocks like natural disasters. Combined with domestic measures, it offers critical breathing room as Sri Lanka embarks on substantial rebuilding. An IMF mission is scheduled for early 2026 to resume EFF discussions and tailor support for long-term resilience.
This aid underscores global solidarity with Sri Lanka amid compounding challenges from climate events and economic recovery.
