IMF SETS PRIORITIES AHEAD OF BUDGET 2026

SAYS STRENGTHENING GOVERNANCE AND RESOLVING LEGACY DEBTS OF SOES IS CRITICAL TO

- By SHABIYA ALI AHLAM

Sri Lanka's economic recovery is gaining traction, the International Monetary Fund (IMF) said, following the end of a two-week mission, while stressing that critical reforms in the energy sector, state-owned enterprises (SOEs) and debt management remain essential.

The IMF's assessment of Sri Lanka's growth trajectory mirrors that of other international agencies, including the World Bank (WB) and the Asian Development Bank (ADB).

Speaking to journalists in Colombo yesterday, IMF Mission Chief for Sri Lanka, Evan Papageorgiou, said the island nation's ambitious reform agenda continues to deliver commendable outcomes. He cited the economy's 4.8 percent year-on-year growth in the first half of 2025, inflation returning to positive territory with prices rising 1.5 percent in September, and gross official reserves reaching US$6.1 billion by end-September.

The staff-level agreement on the fifth review of the country's four-year Extended Fund Facility (EFF) arrangement paves the way for an additional SDR 254 million (approximately US$347 million) in IMF support, once formally approved by the IMF Executive Board.

The agreement is contingent on parliamentary approval of the 2026 Appropriation Bill and the completion of financing assurances confirming multilateral partners' contributions and progress on debt restructuring.

During a Q&A session, Papageorgiou underscored the importance of structural reforms in the energy sector.