IMF gives Sri Lanka US$427 mil. loan to help offset trade deficit
WASHINGTON -- The International Monetary Fund (IMF) on Monday approved a US$427 million loan for Sri Lanka, hoping to shore up government coffers that have been ravaged by a massive trade deficit.
The Washington-based lender said that Sri Lanka's economic recovery continued in 2011, but easy access to credit and a rigid exchange rate had helped extend long-running trade imbalances.
Last year's trade deficit hit nearly US$10 billion, or a fifth of the country's GDP, imposing a massive strain on the country's dwindling foreign reserves and leaving the island exposed to external shocks.
Since 2009 the IMF has lent Sri Lanka US$2.13 billion in an effort to reform the country's economy and improve the government's budget in the wake of a four decades-long ethic war.
The country's foreign currency reserves have been decimated, leaving little cash on hand for a government that is also running a high budget deficit.
“The authorities have recently introduced a broad package of measures,” noted the IMF's Min Zhu.
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