The International Monetary Fund, which has just fully disbursed a $2.6 billion loan to Sri Lanka, said on Monday it has begun talking with authorities in Colombo about arranging a new credit called an extended fund facility.

Last Friday, the IMF disbursed the last tranche of the existing loan — $415 million — following an assessment of the government’s policy reforms.

Koshy Mathai, the IMF’s resident representative in Sri Lanka, said there has been a “very preliminary discussion” with the government on a new facility.

He said the IMF wanted to “move to a new kind of arrangement, a sort of higher level of arrangement, where we are able to focus on macroeconomic goals we already have.”

However, he said the specific arrangement, possible amount and tenure have not been talked about so far.

Lankan Central Bank Governor Ajith Nivard Cabraal in June said Sri Lanka would seek an extended fund facility from the IMF to boost the island nation’s economy after the current loan programme ends.

The $2.6 billion IMF loan has helped Sri Lanka keep inflation at a single digit, boost reserves to a record high as well as reduce the fiscal deficit and debt-to-GDP ratio to manageable levels. (Reuter)

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