Sri Lanka signs IMF loan deal; awaits board nod

July 20, 2009 (LBO) – Sri Lanka has signed a formal document setting out an agreed program with International Monetary Fund staff that is now awaiting approval from its top decision making body, a top official said. On Monday 2013 bonds were offered at 12.95/13.00 percent, down 05 basis points from Friday. A 3-year bond maturing in 2012 was traded at 12.85 percent, about 15 basis points down over last week, dealers said.

Equity market analysts also say some foreign investors were waiting in the wings till the IMF loan was approved to buy in to the Colombo market.

The executive board of the IMF is dominated by the US, which was sabre rattling till recently over the loan.

But last week an US official said his country would not block the loan and pointed out that Sri Lanka has not yet signed a letter of intent for the executive board of the IMF to consider.

A ‘letter of intent’ signed by both the central bank governor and the country’s finance minister sets out in detail the plans the country proposes to take to stabilize its economy including budget deficits and a monetary program setting out targets.

“We have signed the letter of intent,” Central Bank Governor Nivard Cabraal said.

Sri