Sri Lanka secures IMF staff-level pact for 2.9 bln USD loan

COLOMBO -- The International Monetary Fund (IMF) and Sri Lankan authorities have reached a staff-level agreement to support Sri Lanka's economic policies with a 48-month arrangement under Extended Fund Facility (EFF) of about 2.9 billion U.S. dollars, the IMF said here Thursday.

In a statement, the IMF said the new EFF arrangement will support Sri Lanka's program to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking Sri Lanka's growth potential amid a severe economic crisis.

"Sri Lanka has been facing an acute crisis. Vulnerabilities have grown owing to inadequate external buffers and an unsustainable public debt dynamic," the IMF said.

It added the country's economy is expected to contract by 8.7 percent in 2022 and inflation recently exceeded 60 percent. The impact has been disproportionately borne by the poor and vulnerable.

"Against this backdrop, the authorities' program, supported by the Fund, would aim to stabilize the economy, protect the livelihoods of the Sri Lankan people, and prepare the ground for economic recovery and promote sustainable and inclusive growth," the IMF said.

Sri Lanka is presently facing one of its worst economic crises as the country faces a shortage in foreign currency leading to a shortage in essential supplies such as fuel, medicines and even food items.