As Sri Lanka reels from Cyclone Ditwah’s devastation, calls to revisit the ongoing International Monetary Fund (IMF) programme, which critics say imposes punishing austerity, are growing louder.

At least 638 people died — 191 remain missing — and millions were affected by torrential rains, unprecedented flooding, and multiple landslides that battered Sri Lanka late November. The climate disaster, one of the worst the country has witnessed, has dealt a sharp blow to the country’s tentative recovery, three years after it declared bankruptcy amid a financial meltdown.

News in Frames | An island ravaged by a cyclone

Last week, Opposition Leader Sajith Premadasa urged the Anura Kumara Dissanayake government to renegotiate the IMF deal in the wake of the climate catastrophe, calling for immediate talks with the Fund to suspend or amend conditions that aggravate the people’s hardships.

A UNDP study in 2022-23 found that the crushing economic crisis in 2022 had left over half of the island’s population “multidimensionally vulnerable”. Although Sri Lanka has since achieved relative fiscal stability, the condition of the country’s poor — hit hardest by IMF-prescribed spending cuts — has worsened amid stagnant wages, high living costs, and a visibly strained public education and health system they rely on.

In the wake of the recent natural disaster, over 70 civil society groups and activists across Sri Lanka have called for the renegotiation of the IMF deal, debt, and climate justice. “While a majority of people are reeling under austerity measures, including regressive tax hikes, subsidy cuts, and inadequate social security measures, the Government of Sri Lanka has become a prisoner of the ongoing Extended Fund Facility programme of the IMF,” said their statement, issued on December 8, 2025.

“The IMF controlling government spending not only restricts the ability of the government to respond to the ongoing humanitarian crisis, but severely impedes investment in infrastructure, recuperating livelihoods, and adapting to further climate change impacts,” they contended, demanding an “urgent revision” of Sri Lanka’s debt restructuring agreement, a “massive” debt reduction, a halt on subsidy removals, and an immediate standstill on current and future debt servicing for the country’s recovery.

Also read: As cyclone impact unfolds, Sri Lanka braces for daunting recovery

In 2026, the government must service debt totalling over $2 billion, while it tries to lift the country out of the deluge, whose full impact is yet to be ascertained. Some development experts have observed that recovery might prove harder than after the Indian Ocean tsunami of 2004.

Recognising the challenge, President Dissanayake told Newsweek magazine in an interview published on December 8, 2025: “Initial estimates indicate that the damage may well be beyond any natural disaster that our island has endured. So we will have to service debt while simultaneously rebuilding from climate disasters. This is why debt sustainability frameworks for climate-vulnerable countries must change.”

Weighing in on Sri Lanka’s predicament, former President of the Maldives Mohamed Nasheed recently noted that the climate calamity makes it “impossible” for Sri Lanka to stay aligned with the IMF programme. “When Sri Lanka faced its financial crisis in 2022, the IMF approved a four-year Extended Fund Facility after months of negotiation. Yet the Debt Sustainability Analysis (DSA) failed to account for climate shocks,” he said in a post on X, as the cyclone’s impact began unfolding.

Not just Sri Lanka, but several climate-vulnerable, debt-distressed countries are in a similar plight. The Climate Vulnerable Forum — an international alliance of over 70 highly climate-vulnerable countries — has long called for reforming the DSA to properly value resilience investments and natural capital, and for a reformed G-20 Common Framework that includes automatic debt standstills in response to climate shocks, said Mr. Nasheed, who is also the Secretary-General of the Forum.

However, there are no signs yet that the Sri Lankan government may veer away from the IMF programme. In fact, the government has sought a $200 million Rapid Financing Instrument from the Fund. An IMF spokesperson confirmed that Sri Lanka’s request for emergency financing will take precedence over the scheduled fifth review of the ongoing Extended Fund Facility (EFF), which will be deferred to early next year.

Can Dissanayake chart a new economic path for Sri Lanka or will he stay bound by the IMF program? | In Focus podcast

Meanwhile, activists have demanded that the government urgently prioritise equitable relief, focusing on economically and socially marginalised communities most affected by the disaster. “The highest [number of] casualties were reported from Badulla, Kandy, Kegalle, Matale, and Nuwara Eliya districts — areas especially prone to landslides and home to already marginalised and vulnerable working-class tea plantation workers,” the Feminist Collective for Economic Justice, a network of feminist activists across Sri Lanka, said in a statement. Demanding universal social protection schemes that can “efficiently and meaningfully provide a cushion,” the Collective called for urgent negotiations with the IMF and other creditors “to cancel debt repayment and reverse austerity policies in this crisis context”.

Published – December 09, 2025 11:53 pm IST

Indian Navy officers during the handing over of a consignment of Indian humanitarian aid to cyclone-hit Sri Lanka as part of ‘Operation Sagar Bandhu’, in Colombo. Photo credits: X/@DrSJaishankar via PTI