The International Monetary Fund (IMF) is assessing Sri Lanka’s newly announced 2026 budget—including its ambitious 7% economic growth target—to determine whether it meets the requirements of the country’s ongoing bailout program.
At a press briefing yesterday (13), IMF Communications Director Julie Kozack said staff are “reviewing the published budget documents to evaluate whether the 2026 budget is in line with the program parameters.” The findings will directly influence the IMF’s next decision on Sri Lanka.
The IMF and Sri Lankan authorities reached a staff-level agreement on October 9 for the Fifth Review of the country’s Extended Fund Facility (EFF). Once approved by the IMF Executive Board, Sri Lanka will gain access to roughly US$347 million. Kozack noted that the Board discussion is expected “in the coming weeks.”
Beyond budgetary alignment, Kozack underscored the importance of ongoing structural reforms to secure long-term, sustainable growth. Key priorities include:
- Advancing trade liberalization
- Streamlining regulations for foreign direct investment (FDI)
- Accelerating governance reforms, including procurement and AML/CFT improvements
- Strengthening social protection through the Welfare Benefit Payments scheme
“These reforms will be key for further increasing Sri Lanka’s potential growth,” she said, while emphasizing the importance of protecting vulnerable communities during the economic recovery.
The IMF’s review of the budget and reform progress will shape the upcoming Executive Board deliberations, which will decide the release of the next tranche of bailout financing.
