Preliminary agreement reached with IMF

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Sri Lanka has reached a preliminary agreement with the International Monetary Fund (IMF) for a bailout, four sources with direct knowledge of the plan have told Reuters news agency.

The country has been seeking up to USD 3 billion from the global lender in a bid to escape its worst economic crisis since independence from Britain in 1948.

Sri Lankans have faced acute shortages of fuel and other basic goods for months, leaving it in political turmoil and inflation which is now soaring at almost 65 per cent.

The sources, who declined to be named ahead of an official announcement planned for Thursday (1), did not say how much money Sri Lanka might get but optimism around the news sent the country’s bonds to their highest level in two months.

The IMF said its team, that has been in the country for a week, had extended its stay by a day and that a news conference would be at the Sri Lankan Central Bank on Thursday.

“The IMF Mission in Colombo has been extended by one day because discussions are still ongoing with the authorities,” the IMF said in statement.

The Government did not respond to requests for comment, although President Ranil Wickremesinghe told Parliament during the budget presentation on Tuesday (30 August) that talks with the IMF had reached the final stage.

Staff-level IMF agreements, as they are known, need to get formal approval of its management and executive board before recipient nations get any funding.