He said a US-based hedge fund had started the exit process from government securities in 2015, which coincides with the Federal Reserve’s rate hike. This led to many foreign investors, who held local rupee bonds, to leave the market.

Generally, the IMF delays subsequent tranche if the respective member-country is able to drastically deviate from the original target. It was not immediately clear if the IMF would delay the third tranche of $ 119.9 million, which is scheduled for 20 April after the completion of the second review.

The IMF stated on Sunday that Christine Lagarde, the IMF’s Managing Director, would not be visiting Sri Lanka this month as she had been tentatively scheduled to.

One of the main targets of the IMF program was to boost the foreign exchange reserves. The Central Bank had net purchased $ 109.45 million from the market, the official data showed in the second half of 2016.

The Central Bank had expected strong inflows, including from a stake sale of a port to a Chinese firm, but Opposition protests dragged the inflow.

In its first review in November, IMF said it reached a deal with the Government to modify the international reserves target, reflecting changes in capital flows environment.

The original 2016-end NIR target was set on an assumption of outflows from government securities of around $ 450 million in the second-half of last year.

IMF officials were not immediately available for comment.