Sri Lanka aims to have $2.9 billion IMF loan finalised in December - sources

By Jorgelina do Rosario and Uditha Jayasinghe

LONDON (Reuters) - Sri Lanka expects the International Monetary Fund board to approve a $2.9 billion loan by year-end, officials from the country's central bank told investors during a virtual presentation on Friday, sources participating in the event said.

Sri Lanka is struggling with its worst economic crisis in more than seven decades, which has led to shortages of essentials and the ouster of a president.

The IMF board approval of the loan is expected by mid-December. From now until mid-November, the country aims to get financing assurances from public- and private-sector creditors.

Sri Lanka targets agreements in principle with all its creditors between the last quarter of the year and the second quarter of 2023, the sources participating in the event said.

The country earlier this month reached a staff-level agreement with the IMF for the loan of about $2.9 billion, contingent on it receiving financing assurances from official creditors and negotiations with private creditors.

"It's going be very tough, but so much of it depends on China, basically one creditor, so maybe it can be done," said a bondholder who requested anonymity.

The virtual presentation to investors on Friday marks the first time the Sri Lankan government has formally engaged with private bondholders after deciding earlier this year that it would restructure $13 billion in international sovereign bonds, held by private creditors such as asset managers BlackRock and Ashmore.

Central Bank Governor Nandalal Weerasinghe and Treasury Secretary Mahinda Siriwardena participated in the virtual presentation, along with representatives of financial and legal advisers Lazard and Clifford Chance.

"This was a fairly typical kind of introductory presentation that we've seen a lot of times before," the bondholder said. "The government lays how bad the situation is basically trying to anchor expectations towards a deep haircut."