The International Monetary Fund (IMF) has reached agreement with the Sri Lankan government for a $1.5 billion bailout to help the island nation avert a balance of payments crisis.
The three-year loan will require IMF board approval in June, the global lender said on Friday, and is subject to Sri Lanka implementing reforms, including streamlining the tax code and reducing a bloated deficit.
"The Sri Lankan authorities and the IMF have reached a staff-level agreement on a 36-month Extended Fund Facility (EFF)," for a $1.5 billion loan, Todd Schneider, IMF mission chief for Sri Lanka, said in a statement.
The agreement comes as debt-laden Sri Lanka faces a looming balance of payments crisis due to heavy foreign outflows from government securities and high external debt repayments.
Sentiment on financial markets was bolstered by the IMF deal, helping the rupee currency trade firmer and stock index rise nearly 1 percent in early trade.