(MENAFN) The International Monetary Fund (IMF) said that it has reached an agreement with the Sri Lankan government on an economic program that could be supported by a 20-month stand-by credit for a previously approved loan of 2.5 billion, AFP reported.
IMF Managing Director, Dominique Strauss-Kahn, said that the loan aims to help the country cope with the global economic turmoil. It was delayed under political pressure from the US, Britain and other countries which felt the government was not doing enough to avoid civilian casualties as it closed in on the remainders of the Tamil Tiger army.
When the program gets approved by the IMF board, Sri Lanka would be entitled to draw about 313 million immediately, Strauss-Kahn said. The Sri Lankan authorities had requested a 1.9 billion loan in March to aid delay its first balance of payments deficit in four years after foreign currency reserves dropped to six weeks' worth of imports.
Strauss-Kahn said that high budget deficits have forced the Sri Lankan government to depend on short-term financing from foreign markets. The global financial crisis resulted in a sudden end to financing, capital outflows, and a considerable loss of its international reserves.