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The IMF has approved emergency funding of around USD 206 million for Sri Lanka under the Rapid Financing Instrument to support recovery after Cyclone Ditwah caused extensive damage. The cyclone killed 643 people, affected nearly 10% of the population and damaged over 100,000 homes and key infrastructure. Agriculture suffered major losses, with 150,000 hectares of crops destroyed. The support comes as Sri Lanka continues to recover from its 2022 debt default and ongoing IMF bailout programme. Additional domestic spending has also been proposed to aid rebuilding efforts.
The International Monetary Fund has approved emergency financial assistance of around USD 206 million for Sri Lanka under its Rapid Financing Instrument, providing immediate support as the country deals with the aftermath of severe cyclone-related damage. Advertisement
The funding is intended to aid recovery efforts following Cyclone Ditwah, which struck toward the end of last month and caused widespread destruction. The cyclone led to the loss of 643 lives and disrupted the lives of nearly 10% of Sri Lanka's population of about 22 million. Initial assessments indicate that more than 100,000 homes were damaged, along with key infrastructure such as roads, bridges and railway networks.
The impact on agriculture has been substantial. Over 150,000 hectares of rice fields and other crops were destroyed, affecting a sector that supports around 1.8 million families. Agriculture remains a critical part of the rural economy and a key source of employment and food security in the country.
The IMF said the disaster created urgent humanitarian and reconstruction requirements, placing additional pressure on public finances and external accounts. According to the Fund, the emergency support is expected to help Sri Lanka manage these immediate fiscal and balance-of-payments challenges while essential recovery work begins.
This assistance comes at a time when Sri Lanka is still emerging from its most severe economic crisis in more than 70 years. The country defaulted on its foreign debt in 2022 and later secured a USD 2.9 billion bailout programme from the IMF to stabilise the economy, rebuild reserves and restore investor confidence.
As part of the ongoing programme, an IMF delegation is expected to visit Colombo next month to hold discussions related to the fifth review of the bailout arrangement. Separately, the Sri Lankan parliament is set to meet shortly to approve additional public spending of INR 500 billion, equivalent to about USD 1.7 billion, aimed at accelerating reconstruction and providing compensation to affected households.
Authorities have indicated that the fresh funds will be directed towards rebuilding homes, repairing damaged infrastructure and supporting the revival of agricultural production in the worst-hit regions.
Source Reuters
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