Sri Lanka seeking US$3 billion under IMF Extended Fund Facility

An EFF program, which would be the 17th IMF plan for the nation, requires countries to make structural economic reforms “to correct deep-rooted weaknesses”, according to the IMF’s website. These programs normally last three years with a grace period of 4-1/2 years to start paying back the loan, once the plan is approved.

A US$3 billion deal would represent almost four times the country’s quota with the IMF.

The IMF said last week it was in talks with Sri Lanka for a “comprehensive” reform package, but didn’t specify what type of program was being negotiated.

Prime Minister Ranil Wickremesinghe, who took office in May after mass protests forced the resignation of his predecessor, Mahinda Rajapaksa, plans to present an interim budget within weeks.

The government announced on Tuesday a taxation overhaul to boost revenue, hiking corporate tax and raising the value-added tax (VAT) rate to 12 percent from 8 percent with immediate effect.

Sri Lanka recently appointed financial and legal advisers to kick off talks with bondholders and bilateral lenders, such as China and Japan.

SOURCE: NEWS AGENCIES