The executive board of the International Monetary Fund is not expected to formally approve Sri Lanka’s $2.9 billion bailout before year-end, a key step required for the embattled country to receive funding, two sources familiar with the matter said.

Seeking a way out of its worst economic crisis in decades, Sri Lanka reached an IMF staff-level agreement in June with the deal subject to approval and contingent on Sri Lanka authorities following through with previously agreed measures.

Sri Lanka said in September it expected the board to approve the deal by year-end. Progress has been slow in recent months, and Sri Lanka’s finance minister acknowledged last month the request might extend into January.

Sri Lanka has to secure prior financing assurances from creditors, put its heavy debt burden on a sustainable path and increase public revenue before the global lender will disburse the funds. The IMF stressed the importance of joint talks involving three of Sri Lanka’s main bilateral creditors - China, Japan and India.

The IMF’s online board calendar, which has added meetings through Dec. 22 to discuss progress and new tranches for a number of emerging economies, makes no mention of Sri Lanka.

In response to an inquiry, Sri Lanka’s finance ministry said it was “100% focused” on securing IMF approval.

“We are taking every necessary policy step to secure financing assurances from our bilateral creditors as quickly as possible,” the ministry said in an emailed statement.

IMF officials for Sri Lanka said in emailed comments to Reuters it was “difficult to predict the timeline for the Board approval, as the process of debt discussions takes time.”

Sri Lanka said in October it aimed to nearly double its tax revenue to around 15% of gross domestic product by 2026 from 8.5% now - one essential step to unlock IMF funding.

Source: Reuters