IMF clears Sri Lanka double review, despite import controls, treasury hacking

The International Monetary Fund (IMF) approved a $695 million payment to Sri Lanka under its Extended Fund Facility (EFF) program, despite the country failing to meet key performance criteria. The violations included intensifying import controls and missing external debt payments to Australia due to a cybercrime incident. The IMF confirmed that hackers diverted $2.5 million in payments meant for Australia, though investigations are ongoing in coordination with Australian authorities. Sri Lanka’s Treasury requested a waiver for the breach, citing corrective actions and a minor nature of the violation. The IMF acknowledged that most structural benchmarks were met, though some were delayed. Meanwhile, Sri Lanka’s central bank has imposed stricter import surcharges on vehicles following a sharp depreciation of the Sri Lankan rupee in 2026, raising concerns about economic instability. The central bank’s ‘flexible exchange rate’ policy has faced criticism for undermining transparency and democratic norms, as it allows the state agency to intervene unpredictably in forex markets. Analysts warn that the policy contributes to volatility, prompting import restrictions and higher taxes on non-essential goods. The IMF program requires Sri Lanka to address these issues, though the central bank has already raised interest rates in response to currency pressures. Ongoing tensions between monetary and exchange rate policies have led to repeated restrictions on imports, including vehicle bans and increased exporter surrender requirements. Critics argue that the central bank’s interventions, such as monetizing balance of payments deficits, weaken public trust and economic planning. The IMF’s approval comes as Sri Lanka seeks to stabilize its economy amid political and financial challenges.