Sri Lanka’s request for approximately US$ 200 million under the IMF’s Rapid Financing Instrument (RFI) should be understood strictly as urgent disaster relief — not the start of another long‑term bailout programme.
On December 5, 2025, the IMF confirmed that Sri Lanka had applied for SDR 150.5 million (roughly US$ 200 million, about 26 % of its quota) under the RFI, in response to severe economic and humanitarian fallout from Cyclone Ditwah.
The funds, if approved by the IMF Executive Board, would flow as a one‑off, rapid disbursement to address urgent balance-of-payments needs helping rebuild infrastructure, shore up foreign exchange, and stabilize the immediate economic shock.
This emergency facility (RFI) clearly differs from the ongoing Extended Fund Facility (EFF) arrangement that Sri Lanka signed in March 2023. Under that program, the country committed to medium-term structural reforms: fiscal consolidation, debt sustainability, restoring external buffers, controlling inflation, improving governance and social protection.
The EFF spans multiple years (48 months) and involves multiple reviews, milestones, and conditionalities closely monitored by the IMF.
Indeed, Sri Lanka has already drawn several tranches under the EFF. The third review concluded in early 2025 cleared a draw of SDR 254 million (about US$ 334 million), with the fourth review approving another SDR 254 million (about US$ 350 million).
These disbursements reflect a gradual but serious effort by Sri Lanka to stabilize the economy through structural adjustments.
In contrast, the RFI is designed for transitory, urgent shocks like a natural disaster or external shock — where the need is immediate, but does not require the full‑blown conditionality and long-term oversight that an EFF programme would entail.
The support comes without periodic reviews or long‑term reform obligations; once disbursed, the loan must be repaid within 3¼ to 5 years.
Given the scale and nature of the damage inflicted by Cyclone Ditwah affecting infrastructure, livelihoods, and triggering urgent balance-of-payments pressures a request under the RFI is appropriate. It allows Sri Lanka to mobilize foreign exchange quickly for relief and reconstruction, without derailing or complicating the structural program already in place under the EFF.
Indeed, the IMF itself appears to treat the RFI request as an addition to, not a substitute for, existing EFF access. Reports say the Board will prioritize the RFI review, and only then resume the fifth EFF review when conditions permit.
In the delicate aftermath of a disaster, clarity matters. Presenting this RFI request as a distinct, one-time emergency intervention not a new multi‑year programme will preserve the integrity of Sri Lanka’s structural reform path. That clarity is also vital for public confidence and for reassuring international creditors that reform commitments under the EFF remain intact.
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