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IMF confirms loan to Sri Lanka on hold due to crisis

The International Monetary Fund (IMF) confirmed that discussions around the next tranche of a USD $1.5 billion loan have been put on hold due to the island’s deepening political crisis.

An IMF spokesman told Reuters via email on Tuesday that the organisation is “monitoring the situation and remain in close contact with our technical counterparts in Sri Lanka.”

“Program discussions on the 5th review of the IMF’s Extended Fund Facility are currently on hold, pending clarity on the political situation,” it added.

Though Sri Lanka has received over USD $1 billion so far, it was expected to receive a sixth tranche of approximately USD$250 million, with the total loan instalments completed by mid-2019.

The announcement by the IMF comes as Sri Lanka’s political crisis continues to rock the economy, which was already suffering from a depreciating rupee. Yesterday Moody's Investors Service announced that it has downgraded Sri Lanka’s senior unsecured ratings despite calls from the government to block the move.