Sri Lanka economy stable but vulnerable to global shocks: IMF

March 20 (Daiy Mirror) - The International Monetary Fund (IMF) has confirmed that it will conduct a combined fifth and sixth review of Sri Lanka’s Extended Fund Facility (EFF) during an upcoming mission to Colombo, scheduled from March 26 to April 9, 2026.

During a press briefing on Thursday, Julie Kozack, Director of the IMF Communications Department, highlighted the "significant progress" made by the island nation despite the severe impact of 'Cyclone Ditwah'. 

Kozack noted that the Sri Lankan economy has shown remarkable resilience, recording a growth rate of 5% in 2025. Inflation remained stable at approximately 1.6% as of February 2026, while gross international reserves have seen a substantial increase. The country’s debt restructuring process is also reported to be nearing completion.

However, the IMF cautioned that the ongoing conflict in the Middle East poses a significant risk to Sri Lanka’s economic outlook. The Director emphasized that the country is "significantly exposed" to the crisis through three primary channels:

Addressing questions regarding a potential "recalibration" of program targets due to external shocks and rising pressure on households, Kozack stated that the upcoming mission will engage directly with Sri Lankan authorities. 

"The aim will be to complete a combined fifth and sixth review under the program," Kozack said. "The team will be engaging with the authorities to better understand what could be the potential impact of the Middle East conflict on Sri Lanka’s economy."