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Sri Lanka asks IMF for loan extension and relaxed spending targets

Sri Lanka has asked the International Monetary Fund (IMF) to extend a $1.5 billion loan by another year and for tight spending targets to be relaxed ahead of key election, Reuters reports.

The IMF programme is crucial for Sri Lanka to continue ensure favourable borrowing terms. However the fund delayed discussions on the sixth tranche of a three-year loan in November following the country’s plunge into a political crisis over the Sri Lankan president’s attempt to replace the prime minister.

“We will not deviate from the fiscal consolidation path. But expenditure cannot be drastically curtailed this year, given it is an election year. We hope there could be a compromise,” a government official told Reuters.

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