Crisis-Hit Sri Lanka Reaches Staff-Level Agreement With IMF For $2.9 Billion Loan

The International Monetary Fund (IMF) has reached a preliminary agreement with crisis-hit Sri Lanka for a loan of about $2.9 billion, the international lender said in a statement on Thursday (1 September).

The objectives of Sri Lanka's new Fund-supported programme are to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking Sri Lanka’s growth potential.

“The Sri Lankan authorities and the IMF team have reached staff-level agreement to support the authorities’ economic adjustment and reform policies with a new 48-month Extended Fund Facility (EFF) with a requested access of about SDR 2.2 billion (equivalent to US$2.9 billion)," the IMF statement said.

"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," the statement added.

The debt-laden country has been seeking up to $3 billion from the IMF in a bid to come out of the worst economic crisis the island nation has faced since independence from Britain in 1948.

Sri Lankans have faced acute shortages of fuel and other basic goods for months, leaving the country in political turmoil and hit by runaway inflation, which is now at almost 65 per cent year-on-year, the Economic Times reported.