An agreement was reached on Friday between Sri Lanka and the International Monetary Fund (IMF) for a $1.5 billion bailout in order to rectify its finances and evert a balance of payments crisis.
"The Sri Lankan authorities and the IMF have reached a staff-level agreement on a 36-month Extended Fund Facility (EFF)," the IMF mission chief for Sri Lanka, Todd Schneider, said in a statement.
The three-year loan is the second bailout from the IMF since the end of the armed conflict in 2009, and will be depend on Sri Lanka implementing financial reforms including the reduction of the deficit.
Sri Lanka has agreed to “a comprehensive set of reforms to Sri Lanka’s tax system" in view of reducing the fiscal deficit to 3.5 percent of GDP by 2020, as well as reducing government support for state owned companies, the IMF said.
“The government is committed to dealing quickly with the legacy of Sri Lankan Airlines, which continues to represent a drain on public finances after years of mismanagement,” the IMF added.
The bailout agreement will be put to the IMF board for approval in June.
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