LONDON – The executive board of the International Monetary Fund (IMF) is not expected to formally approve Sri Lanka’s US$2.9 billion (S$3.9 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 the 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 is “100 per cent focused” on securing IMF approval.

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

IMF officials for Sri Lanka said in e-mailed comments to Reuters that it is “difficult to predict the timeline for 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 per cent of gross domestic product by 2026 from 8.5 per cent now – one essential step to unlock IMF funding. REUTERS