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Message: <blockquote data-quote="lkdood" data-source="post: 12436802" data-attributes="member: 92282"><img src="http://upload.wikimedia.org/wikipedia/en/thumb/7/7e/International_Monetary_Fund_logo.svg/100px-International_Monetary_Fund_logo.svg.png" alt="" class="fr-fic fr-dii fr-draggable " style="" />The International Monetary Fund on Monday approved a $427 million  loan for Sri Lanka, hoping to shore up government coffers that have been  ravaged by a massive trade deficit.The Washington-based lender  said that Sri Lanka's economic recovery continued in 2011, but easy  access to credit and a rigid exchange rate had helped extend  long-running trade imbalances.Last year's trade deficit hit  nearly $10 billion, or a fifth of the country's GDP, imposing a massive  strain on the country's dwindling foreign reserves and leaving the  island exposed to external shocks.Since 2009 the IMF has lent Sri  Lanka $2.13 billion in an effort to reform the country's economy and  improve the government's budget in the wake of a four decades-long ethic  war.The country's foreign currency reserves have been decimated,  leaving little cash on hand for a government that is also running a  high budget deficit."The authorities have recently introduced a broad package of measures," noted the IMF's Min Zhu.The  government has allowed the rupee to depreciate and slapped credit  ceilings on commercial banks to discourage loans that could fuel further  imports.The country needs to borrow heavily to finance the trade  deficit and repay debt which could push the country into a vicious debt  cycle, experts warn. The government has insisted, however, that it does  not risk a sovereign default.<img src="http://www.google.com/hostednews/img/afp_logo.gif" alt="" class="fr-fic fr-dii fr-draggable " style="" /></blockquote>

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