How is the IMF Assisting Sri Lanka After Cyclone Ditwah's Devastation?

IMF's Support for Sri Lanka Post-Cyclone Ditwah

Colombo: The International Monetary Fund (IMF) is actively seeking ways to assist Sri Lanka in its recovery efforts following the catastrophic impact of Cyclone Ditwah, which has resulted in over 450 fatalities across the nation.

During a press conference on Thursday, IMF spokesperson Julie Kozack stated that the organization is committed to supporting Sri Lanka's recovery, reform, and resilience through the Extended Fund Facility (EFF) arrangement.

Kozack expressed her heartfelt condolences to those affected by the cyclone and mentioned that the IMF is in close communication with Sri Lankan officials, development partners, and other stakeholders to evaluate the humanitarian, social, and economic repercussions of the disaster.

"In October, prior to the cyclone, staff and Sri Lankan authorities reached a Staff-Level Agreement on the Fifth Review. Currently, staff is exploring additional support options for Sri Lanka's recovery," she noted.

The country is facing severe flooding, landslides, and significant infrastructure damage due to Cyclone Ditwah, which has left many districts cut off and overwhelmed the disaster response capabilities.

Kozack indicated that an IMF Board meeting is scheduled for December 15 to review the next steps in Sri Lanka's EFF program.

Sri Lanka is anticipated to receive its sixth tranche from the nearly USD 3 billion IMF bailout, with officials optimistic about an expedited release.

The 48-month EFF agreement, initiated in March 2023, included stringent reforms aimed at restructuring Sri Lanka's welfare-based governance.

This agreement was established after the country experienced an unprecedented economic crisis, marked by its first-ever sovereign default.

Regarding the Fund's assistance following the cyclone, Kozack stated, "We will provide further details as we assess the economic needs and damages, and as we gather more information to guide our support options for Sri Lanka."

Sri Lanka is currently assessing the financial impact of Cyclone Ditwah, with preliminary estimates suggesting that recovery costs could range from USD 6-7 billion, representing about 3-5 percent of the GDP.

A report from Sri Lanka's Disaster Management Centre released early Friday confirmed that 486 individuals have died and 341 are unaccounted for due to the severe floods and landslides triggered by the cyclone since November 16.

In the aftermath of the cyclone, there have been increasing demands from both the government and opposition for concessions from the IMF.