Sri Lanka to raise $2.5bn as IMF money delayed

COLOMBO: Sri Lanka will raise $2.5 billion through sovereign bonds and syndicated loans amid delays in securing the latest instalment of an International Monetary Fund bail out, the finance minister said Thursday.

The island was hoping to issue about $1.5 billion in bonds by June, while nearly $1 billion extra will come from a syndicated loan to be raised in late May, Ravi Karunanayake said.

Talks with the IMF to obtain the third tranche of a $1.5 billion bailout were ongoing, he said, but there was no agreement yet on the conditions.

"There is no hiding the fact that there are differences (with the IMF)," the minister told reporters in Colombo.

The IMF is insisting on tax reforms and corrections in monetary policy, and has asked that Sri Lanka speed up reforms to its loss-making state enterprises.

Colombo is hopeful an agreement can be reached so the next instalment of $162 million can arrive by June, roughly two months behind schedule.

"The money we get from them is not significant, but the IMF (program) helps us demonstrate that we have managed the economy well," Karunanayake said.

The government plans to sell off stakes in its ports, and the loss-making national airline has stalled due to opposition protests and the lack of investor interest.

"Progress on implementing structural benchmarks was somewhat uneven with some of the reforms lagging behind intended timelines," the IMF said last month.

Official reserves -- resting at $6 billion at the end of last year -- declined to $5.11 billion at the end of March, down from $5.63 billion a month earlier.

Last June, the government received the $1.5 billion bailout in seven instalments from the IMF after facing a balance of payments crisis.

Early last month, the IMF said Sri Lanka's current account remained stable, but the financial account weakened with the resumption of capital outflows.

The IMF also warned that a prolonged drought on the island could raise food and oil imports with adverse impacts on economic growth, inflation, and the balance of payments.