ECONOMYNEXT – A team from the International Monetary Fund will visit Sri Lanka from January 22 to 28 to assess the impact of Cyclone Ditwah which will be used to develop next phase of the program where the last review is uncompleted.
“The findings of the mission will feed into subsequent discussions on the IMF-supported program,” Evan Papageorgiou, International Monetary Fund (IMF) Mission Chief for Sri Lanka said in a statement.
“This mission underscores the IMF’s commitment to supporting Sri Lanka as it deals with the economic and humanitarian challenges caused by the recent cyclone.
“During the visit, the IMF team will engage with government officials and relevant stakeholders to understand the full impact on infrastructure, livelihoods, and economic stability.
“The IMF team will explore how it can best assist Sri Lanka in its recovery efforts, including by resuming the Extended Fund Facility-supported program and offering policy advice and technical assistance to promote resilience and sustainable growth.”
Sri Lanka was unable to complete the fifth review of the IMF program despite exceeding most targets after the budget on which the next review of the program was based on was expanded by 500 billion rupees affecting fiscal targets.
The IMF has initially assessed that the cyclone will cost 0.2 percent in gross domestic product.
Since the end of a civil war however Sri Lanka’s growth has been usually hit by the stabilization crises and currency collapses that usually came in the wake of rate cuts enforced with inflationary open market operations.
Inflationary open market operations are deployed despite having a reserve collecting central bank, to narrowly target the policy rate rejecting classical economic theory, primarily by Hume’s price specie flow mechanism, and described in detail as applied to more modern banking systems by Ricardo and the currency school.
Justification for printing money operating an unsound monetary system and depending on inflation (stimulus) is justified by the use of empirics, which in turn depends on the heavy us historical data and rejecting theory, critics say.
Sri Lanka is currently believed to be growing at rates above the ‘potential output’ to claw back lost GDP from past aggressive macro-economic policy with the central bank missing its inflation target. (Colombo/June16/2026)