5 Mar 2009

Sri Lanka negotiating loan with IMF

9:44 am on 5 March 2009

Sri Lanka is negotiating a $US1.9 billion loan agreement with the International Monetary Fund.

Funding is needed to help weather the global financial crisis and pay for post-war reconstruction.

The economy is under pressure because of shrinking export earnings from tea and garments. Foreign currency reserves dropped by half in the last four months of 2008 as the central bank defended the rupee.

Troops are close to defeating the Tamil Tiger rebels after a 25-year conflict.

President Mahinda Rajapaksa has pledged major reconstruction efforts in northern and eastern parts of the country affected by the war.