by Our Correspondent in Colombo
Sri Lanka is set to enter a new agreement with the International Monetary Fund (IMF) when its current programme expires in March 2027, according to sources familiar with discussions within the Foreign and Finance Ministries.
The move would mark the continuation of Sri Lanka’s engagement with the IMF beyond its current agreement and comes despite growing reservations within the Janatha Vimukthi Peramuna (JVP) leadership over the political consequences of extending the programme.
According to the sources, the question of whether Sri Lanka should enter an 18th agreement with the IMF has been under discussion within the JVP as the March 2027 expiry date approaches. A majority of the party’s senior leadership is understood to believe that entering a new agreement could increase public pressure on the government and undermine positions the JVP has previously taken on the IMF.
President Anura Kumara Dissanayake, however, has not publicly committed himself to either position. Within discussions surrounding the issue, he has reportedly highlighted both the advantages and disadvantages of continuing with the IMF programme.
Despite those reservations, the President’s close circle has argued that Sri Lanka’s economy remains too fragile to abandon the IMF programme. Their position has gained importance as the country approaches a critical period in 2028, when foreign debt repayments currently suspended are expected to resume.
According to these sources, continued IMF involvement would be particularly important if Sri Lanka encounters difficulties meeting those repayments. IMF support could also prove significant if the government is required to return to negotiations with private creditors over its external debt obligations.
The President’s close advisers have also argued that remaining within the IMF programme is necessary to improve Sri Lanka’s international credit ratings. In their view, continued adherence to the programme would strengthen the country’s ability to regain access to international financial markets and manage the pressures expected as debt servicing resumes.
The sources indicate that President Anura has consequently moved closer to the position of this inner circle, strengthening expectations that Sri Lanka will seek a new agreement rather than allow its current IMF engagement to end in March 2027.
Among those advocating this position is Duminda Hulangamuwa, a member of the President’s close circle who has long been described by critics as having acted as an “IMF pawn”. His reported position is unequivocal: whether Sri Lanka wants it or not, the country will have to enter a new agreement with the IMF in March 2027.
More significantly, sources claim that the IMF has already prepared a draft of the proposed new agreement and that the document has been handed to Duminda Hulangamuwa.
The claim, if confirmed, would indicate that preparations for the next phase of Sri Lanka’s IMF relationship are already considerably advanced, even as the political debate over the agreement continues within the governing camp.
Sri Lanka’s decision will therefore carry consequences beyond the formal expiry of the current programme. For the JVP, another IMF agreement could expose the government to renewed public pressure and revive questions about the party’s earlier opposition to IMF-driven economic policies. For the government’s economic policymakers, however, continued IMF backing is being presented as necessary to navigate the country’s return to external debt repayments and restore international financial credibility.
The sources say the direction of travel is now increasingly clear: despite internal reservations, Sri Lanka is preparing to remain within the IMF framework beyond March 2027.
