IMF mission leaves Sri Lanka without a staff-level agreement on the seventh review; growth at 4.2%, inflation at 8% on the oil shock

According to the IMF statement reported by Ada Derana and Newswire on 23 September, the mission led by Evan Papageorgiou was in Sri Lanka from 10 to 23 September for the seventh review of the Extended Fund Facility and the 2026 Article IV consultation. The mission described the discussions as productive, but no staff-level agreement was announced; talks on the parameters needed to complete the review are to continue in the near term. The mission met President Anura Kumara Dissanayake and Prime Minister Harini Amarasuriya and visited Jaffna. The size of the tranche to be released on completion of the review does not appear in the sources; it could not be verified.

According to the IMF, the economy grew 4.2% in the second quarter of 2026, marking 11 consecutive quarters of strong growth; gross official reserves stood at 6.9 billion dollars at the end of August, banks are well capitalised and the debt restructuring is largely complete. Headline inflation, however, rose to 8% year on year in August because of the global oil price shock, 3 points above the 5% target. The IMF sees risks tilted to the downside, citing the Middle East conflict, shifts in global trade policy and the El Niño effect; it is calling for a medium-term revenue strategy, a reduction in tax exemptions, cost-reflective energy pricing, a more flexible exchange rate and the removal of bottlenecks in reconstruction spending after Cyclone Ditwah.