The International Monetary Fund (IMF) is actively considering additional financial support for Sri Lanka as the island nation reels from the catastrophic impact of Cyclone Ditwah. The storm has caused massive destruction, claiming over 450 lives and severely damaging infrastructure.
IMF's Commitment to Sri Lanka's Recovery
During a press briefing on Thursday, IMF spokesperson Julie Kozack confirmed the global lender's ongoing support. She stated that the IMF is "continuing to support Sri Lanka's recovery, reform, and resilience" under its existing Extended Fund Facility (EFF) arrangement. While a Staff-Level Agreement for the programme's fifth review was reached in October, before the cyclone, the IMF is now looking into new options to help the country cope with the disaster's aftermath.
"Right now, Staff is looking into options to further support Sri Lanka in the recovery process," Kozack said. She added that an IMF Board meeting scheduled for December 15 will examine these potential support measures. More details will emerge as the assessment of economic damages progresses.
Scale of Devastation and Economic Toll
Cyclone Ditwah has plunged Sri Lanka into a severe crisis, triggering widespread flooding, landslides, and a collapse of critical infrastructure. Several districts remain isolated, stretching the country's disaster-response capacity to its limits. The government is currently calculating the total cost of the devastation.
Preliminary estimates are staggering, suggesting that USD 6-7 billion will be required for recovery. This loss could equate to a devastating 3-5 per cent of Sri Lanka's GDP. This new crisis hits a country already struggling to emerge from a deep economic abyss.
Background of the IMF Bailout and Political Consensus
Sri Lanka is in the midst of a 48-month, nearly USD 3 billion IMF bailout programme agreed upon in March 2023. This deal followed the nation's first-ever sovereign default and imposed tough reforms on its welfare-based governance model. The country is now anticipating the release of its sixth tranche of this crucial funding.
In a rare show of unity, both the Sri Lankan government and the opposition have called for concessions from the IMF in light of the cyclone's impact. The nation's authorities are hopeful for an early disbursal of the next loan installment to help finance the monumental recovery effort ahead.
