Sri Lanka’s Repayment Capacity ‘Adequate’| But Risks Loom Large, Says IMF

COLOMBO (News 1st); Sri Lanka’s ability to repay its obligations remains adequate but subject to significant risks, according to the latest IMF assessment, which underscores the fragile balance between progress and vulnerability.

The IMF notes that this assessment hinges on successful implementation of the Extended Fund Facility (EFF) program, a cornerstone of Sri Lanka’s economic recovery strategy.

With high debt levels and gross financing needs, the Fund warns that debt sustainability risks remain elevated, reinforcing the urgency of strengthening institutions and building frameworks for lasting fiscal stability.

Capacity-to-Repay (CtR) indicators have temporarily deteriorated compared to the Fourth Review.

Under the combined Rapid Financing Instrument (RFI) and EFF, IMF credit outstanding is projected to peak at 3.1% of GDP in 2027, unchanged from the previous review.

The report calls for institutional strengthening and fiscal discipline to ensure resilience against external shocks and long-term stability.