COLOMBO: The International Monetary Fund (IMF) said on Friday it has reached agreement with the Sri Lankan government for a $1.5 billion bailout to help the island nation avert a balance of payments crisis.
The three-year loan will require IMF board approval in June, the global lender said, and is subject to Sri Lanka implementing reforms, including streamlining the tax code and reducing a bloated deficit.
"The Sri Lankan authorities and the IMF have reached a staff-level agreement on a 36-month Extended Fund Facility (EFF)," for a $1.5 billion loan, Todd Schneider, IMF mission chief for Sri Lanka said in a statement.
The agreement comes as debt-laden Sri Lanka faces a looming balance-of-payment crisis due to heavy foreign outflows from government securities and high external debt repayments.
Sri Lanka´s foreign exchange reserves have fallen by a third from their peak in late 2014 to $6.2 billion at end-March.
The government will seek to raise the tax-to-gross domestic product (GDP) ratio, which was 10.8 percent in 2014, to near 15 percent by 2020 through a new Inland Revenue Act, reform of the VAT and the customs code, Schneider said.
The loan - the second bailout from the IMF since 2009 – will support the government´s ambitious economic reform agenda aimed at fundamental changes to tax policy, reverse a two-decade decline in tax revenues, and put public finances on a sustainable medium-term footing, Schneider said.
Ex-FBR chief says Pakistan fast heading towards "economic failure"
The rate of gold has fluctuated in both the international and domestic markets this week
Finance Ministry believes Atif Mian has made misplaced criticism from a purely theoretical point of view
Survey results indicate most of the respondents experienced an increase in their electricity bills in recent months
Finance minister shares various economic avenues in which both countries can further deepen their economic relations
Government plans to import one-third of total crude oil needed from Russia, says minister