The credit line is to due to expire on March 17 with Sri Lanka having used only about two-thirds of it, mainly for medicines and food, said the sources and another person familiar with the matter.

The extension talks come as the economy improves and forex reserves rise for Sri Lanka, where huge protests took place last year amid widespread shortages of essentials after the COVID-19 pandemic hurt tourism and remittances while exposing low tax revenues.

A source at the Sri Lankan Finance Ministry said the government wanted to extend the credit line by 6-12 months because there was about $300 million of it left unused. No agreement had been reached, said the source.