IMF to resume Sri Lanka’s loan discussion in February: Lagarde

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The International Monetary Fund will resume discussions with Sri Lanka in February for further disbursal of part of a $1.5 billion loan, the lender said, after a political crisis led to talks being delayed by three months.

Sri Lanka government leaders had agreed to stick to a reform programme following a meeting with IMF managing director Christine Lagarde in Washington on Tuesday, the bank said in a statement.

Sri Lanka is struggling to restore investor confidence and pay down its debt after it was plunged into political turmoil in October when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament.

A court later ruled the move was unconstitutional, and Wickremesinghe was reinstalled as premier.

“The IMF remains ready to support the Sri Lankan authorities in these endeavors and an IMF team is scheduled to visit Colombo in mid-February to resume program discussions,” Lagarde said after meeting with Finance Minister Mangala Samaraweera and the central bank governor Indrajit Coomaraswamy.

“We discussed the challenging economic environment and the policy priorities for the country. The authorities stressed Sri Lanka’s continued commitment to their economic reform agenda under the IMF-supported program,” Lagarde said.

A series of credit rating downgrades have made it harder for Sri Lanka to borrow as it faces record high repayments of $5.9 billion this year, $2.6 billion of which fall due in the first three months.

On Tuesday, the island nation’s junior finance minister Eran Wickramaratne told Reuters that Sri Lanka is considering an offer from Bank of China (601988.SS) for a loan of $300 million, which could be raised to $1 billion, to help it meet repayments in coming months.