The Cabinet of Ministers has approved a $ 100 million loan agreement with the Asian Development Bank (ADB) to support Sri Lanka’s economic recovery and reform agenda.
The approval follows the conclusion of formal loan negotiations between the Department of External Resources and the ADB. The proposal was submitted by President Anura Kumara Dissanayake in his capacity as Finance, Planning and Economic Development Minister.
‘The financing will be provided from the ADB’s regular general capital resources and will consist of two equal components; a policy-based loan of $ 50 million and an investment loan of $ 50 million,’ Cabinet Spokesman and Minister Dr. Nalinda Jayatissa said at the weekly post-Cabinet meeting media briefing yesterday.
The facility forms part of the Macro-Recovery Sectoral Development Program, which the Cabinet approved for implementation on 7 September 2026. The program draws on $ 100 million from a broader $ 620 million ADB policy-based loan facility.
The wider facility, approved by the Cabinet on 16 March 2026, covers five sub-programs and is intended to advance Sri Lanka’s reform agenda in line with the IMF’s Extended Fund Facility (EFF) program. The Cabinet had also authorised negotiations with the ADB at that time.
The latest approval comes as the Government considers whether Sri Lanka will require a fresh IMF arrangement after the current EFF program expires in March 2027.
Dr. Jayatissa said the question of a new IMF facility had not been discussed at Monday’s Cabinet meeting. He noted that the evolving international situation, particularly tensions in the Middle East, would influence the Government’s assessment of the economy’s ability to withstand further external shocks without additional support.
‘No one can predict what will happen amidst the ongoing Middle East tensions and if the Government is considering a fresh deal with the IMF, it would only be discussed in the early months of 2027,’ he said, adding the Government was balancing its growth ambitions against the need to preserve economic stability.
At the Sri Lanka Economic and Investment Summit 2026, President Dissanayake said discussions were underway on the possibility of a new agreement with the IMF that would shift the emphasis from crisis recovery towards economic growth without reversing gains achieved under the existing program. ‘We are at a mid-level and open about it,’ the President said during a fireside chat at the summit, adding that the Government would use the remaining six months of the current arrangement to assess its options before deciding on the future of its engagement with the IMF (https://www.ft.lk/front-page/President-keeps-door-open-to-fresh-IMF-deal/44-798601).