International Monetary Fund (IMF) is currently supporting Sri Lanka under a 48-month Extended Fund Facility (EFF) arrangement, which was approved on March 20, 2023. IMF+3IMF+3IMF+3
Here are key details of the programme:
- The approved amount is SDR 2.286 billion (roughly US$3 billion) for the full arrangement. IMF+2IMF+2
- The programme’s main objectives include:
- Restoring fiscal and debt sustainability. IMF+2IMF+2
- Safeguarding price stability and rebuilding external reserves / buffers. IMF+2IMF+2
- Strengthening governance, reducing corruption vulnerabilities, and advancing structural reforms aimed at growth. IMF+1
- Protecting vulnerable groups while implementing fiscal reforms. IMF+1
- Progress:
- Conditions and caveats remain:
In summary: Sri Lanka is in an ongoing IMF-supported reform programme under a 4-year EFF, started in March 2023, aimed at stabilising the economy, restructuring debt, reforming governance and public finances, while protecting vulnerable segments.
Here is a summary of what the International Monetary Fund (IMF) indicated in its Staff Report for the Fourth Review of the EFF-arrangement with Sri Lanka (dated 3 July 2025) including which benchmarks were met and which remain outstanding. IMF
✅ Benchmarks met (or implemented)
From the report and press release:
- All quantitative performance criteria for end-March 2025 were met except for the stock of expenditure arrears. IMF+2Central Bank of Sri Lanka+2
- The two prior actions for the Fourth Review were met:
- All structural benchmarks due by end-May 2025 were either met or implemented with a delay. IMF eLibrary+1
- Significant progress: debt restructuring is nearing completion; reserve accumulation; revenue mobilisation improving. IMF+1
⚠️ Benchmarks outstanding / issues
Despite the strong progress, the report flagged some remaining weaknesses:
- The continuous structural benchmark on cost-recovery electricity pricing (i.e., maintaining it over time) remains not fully met (i.e., it was met for the prior action but the continuous element remains a risk). Central Bank of Sri Lanka+1
- The stock of expenditure arrears was not met (i.e., the target for the size of arrears was breached) and the IMF granted a waiver for this non-observance. IMF+1
- On governance/structural reforms: while many benchmarks were met, the authorities still need to deepen reforms such as: strengthening tax exemption frameworks, improving public financial management (PFM) and arrears reporting systems, enhancing SOE (state-owned enterprise) governance, and implementing asset-declaration systems. IMF
- Inflation in 2025 Q2 fell below the lower band of the monetary policy consultation clause (i.e., inflation was too low, due to energy price developments) signalling unusual conditions and risk for policy calibration. IMF+1
- Carry-over risks: global trade policy uncertainty, external shocks, execution risk in capital spending, and ensuring momentum in structural reforms. IMF
🔍 Summary table
| Type of benchmark | Status | Notes |
|---|---|---|
| Quantitative criteria (end-March 2025) | Met except expenditure arrears | Arrears target breached → waiver given |
| Prior actions for 4th review | Met | Electricity pricing & tariff adjustment |
| Structural benchmarks (due end-May) | Met or implemented with delay | Outstanding: continuous benchmarks & deeper reforms |
| Continuous obligations | Not fully met / still a risk | Cost recovery pricing, governance, PFM |
Sri Lanka: Selected Economic Indicators (2024–2027)
Sources: Sri Lankan authorities and IMF staff estimates
📈 GDP and Inflation (percent)
| 2024 (Est.) |
2025 | 2026 | 2027 | |
|---|---|---|---|---|
| Real GDP Growth | 5.0 | 3.5 | 3.1 | 3.1 |
| Inflation (avg, CPI) | 1.2 | 3.3 | 5.2 | 5.0 |
| Inflation (end-period) | -1.5 | 8.9 | 5.2 | 5.0 |
| GDP Deflator | 3.8 | 3.6 | 5.3 | 5.1 |
| Nominal GDP Growth | 9.0 | 7.1 | 8.5 | 8.4 |
💰 Savings and Investment (% of GDP)
| 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|
| National Savings | 25.2 | 21.8 | 22.2 | 22.9 |
| Government | -3.2 | -2.0 | -0.8 | -0.1 |
| Private | 28.4 | 23.8 | 23.0 | 23.0 |
| National Investment | 27.0 | 21.8 | 22.1 | 22.5 |
| Savings-Investment Balance | -1.8 | 0.0 | 0.1 | 0.4 |
🏛️ Public Finance (% of GDP)
| 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|
| Revenue & Grants | 13.7 | 15.0 | 15.2 | 15.3 |
| Expenditure | 19.3 | 20.5 | 19.7 | 19.2 |
| Primary Balance | 2.2 | 2.3 | 2.3 | 2.3 |
| Central Gov. Balance | -5.6 | -5.4 | -4.5 | -3.9 |
| Public Debt | 105.2 | 109.6 | 107.4 | 103.6 |
🏦 Money and Credit (% change, end-period)
| 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|
| Reserve Money | 15.8 | 6.5 | 8.5 | 8.4 |
| Broad Money | 8.6 | 6.5 | 8.5 | 8.4 |
| Credit to Private Sector | 10.7 | 9.4 | 9.2 | 9.3 |
🌏 External Sector & Reserves
| 2024 | 2025 | 2026 | 2027 | |
|---|---|---|---|---|
| Exports (US$ mn) | 12,772 | 12,880 | 13,490 | 14,194 |
| Imports (US$ mn) | -18,828 | -21,363 | -22,447 | -23,578 |
| Current Account (% GDP) | 1.8 | 0.0 | -0.1 | -0.4 |
| Gross Reserves (US$ mn) | 6,122 | 7,255 | 9,273 | 12,974 |
| Reserves / Imports (months) | 3.0 | 3.3 | 4.0 | 5.4 |
| External Debt (% GDP) | 54.4 | 55.1 | 58.6 | 59.4 |
📊 Memorandum items: Nominal GDP (Rs bn): 29,899 → 37,664 (2024–2027) | Exchange rate (avg): Rs 302/USD (2024)
1/ Colombo CPI. 2/ Includes CBSL external liabilities. 3/ PBOC swap excluded until GIR > 3 months of imports.