Sri Lanka open to new IMF programme if it supports growth: President

President Anura Kumara Dissanayake says Sri Lanka is ready to enter a new programme with the International Monetary Fund (IMF), provided it supports economic growth and not just stability, as the current four-year arrangement enters its final six months.

Speaking at the Sri Lanka Economic and Investment Summit 2026 in Colombo on Monday, he said a team of Finance Ministry officials and the Central Bank Governor is discussing what a follow-on programme should look like. A decision is expected within the remaining six months, taking external shocks into account.

The first Extended Fund Facility (EFF) was designed to bring stability, the President said, and that goal has been met. “The next step is to preserve it while achieving economic growth.” He added that there had been no major contradiction between the government’s economic vision and the IMF’s conditions, which allowed the programme to run its course without conflict.

Reserves still short

The President said Sri Lanka’s credit ratings have improved, but foreign reserves still need to rise to the expected level before the country can move ahead. Fitch Ratings upgraded Sri Lanka to ‘B-‘ from ‘CCC+’ in September, and the Central Bank has put reserves at US$6.9 billion at the end of August.

Fuel is the main pressure. Sri Lanka spent US$4.042 billion on fuel imports last year, and US$4.082 billion in the first eight months of this year alone. If the trend continues, the President said, the annual bill could reach about US$6 billion, a major challenge for the economy.

Subsidies as a shock absorber

When the Middle East war began, the government’s priority was to keep fuel, electricity and gas flowing without disruption, something he said many countries failed to do. With the economy still recovering from the 2022 crisis, he said it could not withstand another shock, which is why the Ditwah relief package was introduced. The economy grew 5.2% in the first quarter.

Over the first five months of the year, the government spent Rs. 60 billion on a diesel subsidy of Rs. 100 a litre and a petrol subsidy of Rs. 20 a litre. No subsidy was paid in September, but pressure returned, so diesel will be subsidised by Rs. 70 a litre from October to December at a cost of Rs. 41 billion.

The support is meant for targeted groups such as farmers using tractors and traders delivering bread, but weaknesses in beneficiary data have forced a general subsidy. The government will talk to Dialog and Mobitel about a mechanism that gets the money only to intended recipients.

The President also accused private fuel suppliers of failing to match Ceylon Petroleum Corporation (CPC) prices and of holding back stock. The CPC has made a profit of Rs. 28 billion and is willing to share part of it as relief, he said, adding that it is unfair to pass a Rs. 132 per litre diesel price gap on to the public. The government will set up 75 new CPC stations in areas where private companies have restricted supply.

What it means

The President’s remarks suggest the government wants a successor programme that leans towards growth, and is wary of committing before reserves are stronger and the fuel bill is clearer. He said nothing can reliably predict how long the Middle East war will last, so the timing and terms of any new deal will depend partly on events outside Colombo.