IMF approves $206 million in emergency financial support for Sri Lanka

Dec 19 (Reuters) - The International Monetary Fund said on Friday it had approved emergency funding of about $206 million for Sri Lanka under the Rapid Financing Instrument.

The funds aim to support recovery efforts following the devastation caused by Cyclone Ditwah, which struck in late November, killing 643 people and affecting roughly 10% of the country’s 22 million population.

According to initial estimates, over 100,000 homes and critical infrastructure, including roads, bridges, and railroads, were damaged.

The storm also destroyed over 150,000 hectares of rice fields and other crops, hitting the vital agriculture sector that employs about 1.8 million families.

"The disaster has created urgent humanitarian and reconstruction needs, generating significant fiscal pressures and balance-of-payments needs," Kenji Okamura, IMF Deputy Managing Director said in a statement.

"The emergency financial support provided by the IMF under the RFI will help address these pressures."

The funding comes as Sri Lanka continues to recover from its worst economic crisis in over seven decades, which led to a foreign debt default in 2022 and a $2.9 billion IMF bailout program.

An IMF delegation is expected in Colombo next month for talks on the program’s fifth review.

Sri Lanka's parliament will convene on Saturday to approve 500 billion rupees ($1.7 billion) in additional spending to strengthen rebuilding efforts and compensate affected families.

Authorities said the funds will focus on restoring homes, repairing infrastructure, and reviving agricultural production.