IMF provisionally agrees on $2.9 billion loan for crisis-hit Sri Lanka

Sri Lanka is going through its worst economic crisis since its independence in 1948 which was triggered by a severe paucity of foreign exchange reserves

Crisis-hit Sri Lanka has reached a preliminary agreement with the International Monetary Fund for a loan of about $2.9 billion, the international lender said on Thursday.

Sri Lanka is going through its worst economic crisis since its independence in 1948 which was triggered by a severe paucity of foreign exchange reserves.

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“IMF staff and the Sri Lankan authorities have reached a staff-level agreement to support Sri Lanka’s economic policies with a 48-month arrangement under the Extended Fund Facility (EFF) of about 2.9 billion U.S. dollars,” the IMF said in a statement.

The objective is to restore macroeconomic stability and debt sustainability while safeguarding financial stability, among other factors, it added.

Sri Lanka started negotiating for the facility in late April after announcing its first ever international debt default. The government later appointed legal and debt advisors to handle the debt restructuring as prescribed by the IMF.

“Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps”, it said.