The International Monetary Fund has approved emergency funding of USD 206 million under its rapid finance instrument to help Sri Lanka address urgent needs arising from the catastrophic Cyclone Ditwah and preserve macroeconomic stability.

The cyclone caused widespread destruction across the island nation and left more than 643 people dead.

In a statement issued on Friday, the Washington-based IMF said the disaster created immediate humanitarian and reconstruction needs, generating significant fiscal pressures and balance-of-payments challenges.

The emergency financial support will help Sri Lanka address these pressures, the IMF said.

The Fund added that the cyclone struck at a time when the Fifth Review of Sri Lanka’s USD 2.9 billion bailout programme was nearing completion.

“Given the time needed to assess the economic impact of the cyclone and examine how an IMF-supported programme can best support Sri Lanka’s recovery and reconstruction efforts while preserving objectives and policy priorities, the Fifth Review has been deferred,” it said.

"An IMF mission team will visit Sri Lanka in early 2026 to resume discussions,” it added.

The 48-month extended fund facility deal with the IMF in March 2023 carried hard reforms to Sri Lanka's welfare-based governance.

It was signed after Sri Lanka plunged into an unprecedented economic meltdown with its first-ever sovereign default.

Several hours before the IMF decision, the parliament here approved without a vote a supplementary estimate of LKR 500 billion, which the government said was required to restore the livelihoods of those affected by the disaster.