The head of an International Monetary Fund delegation to Sri Lanka has stated that the country was to ask for further loans from the IMF, after coming to the end of a $2.6 billion bailout.

John Nelmes, the head of the IMF mission, declined to state how much further the country sought as a bailout but said,

"We have initiated a discussion of a program to help Sri Lanka get deeper into a middle-income level country." 

According to the AFP, sources from Sri Lanka’s finance ministry have indicated at least a further $500 million would be needed as Sri Lanka’s trade deficit widened to a record $10 billion last year.

See the report from AFP here.
Also see our earlier post: Trade deficit widens (12 June 2012) 

Addressing journalists, Nelmes went on to downgrade Sri Lanka’s growth forecast from the Central Bank’s optimistic 7.2 percent, to 6.75 percent, further stating that inflation also looks set to rise to 9.5 percent by the end of the year.

Nelmes also told journalists that drastic action was needed in order to raise revenues for the country, noting that steps such as depreciating the local currency by 15 percent against the dollar, hiking taxes and interest rates had helped improve balance of payments. Additionally, he warned the government against commercial borrowings which risk pushing the island into a cycle of debt.

Sri Lanka meanwhile insisted that there was no risk of a sovereign default.