The International Monetary Fund has approved a US$695 million disbursement to Sri Lanka under its Extended Fund Facility programme despite breaches of two key conditions linked to external payments and import controls.

 

In a statement issued after completing the combined fifth and sixth reviews of the programme, the IMF said Sri Lanka had failed to meet performance criteria on “no new external payment arrears” and on avoiding the imposition or intensification of import restrictions.

 

The IMF said a cybercrime incident targeting Sri Lanka’s Treasury caused missed debt repayments worth US$2.5 million owed to Australia since November 2025. Colombo has requested a waiver, citing the breach as minor and saying corrective measures are underway.

Sri Lanka also tightened import restrictions after a sharp depreciation of the rupee in 2026 triggered pressure on external accounts and inflation. Critics argue the island’s “flexible exchange rate” regime allows excessive discretionary intervention by the central bank, contributing to currency instability, higher living costs and recurring import controls.

The IMF nevertheless described overall programme implementation as “generally strong.”