* Sri Lanka talking to several countries about currency swaps
* IMF loan not likely to carry "unfavourable" conditions
By Manolo Serapio Jr.
MANILA, March 10 (Reuters) - Sri Lanka is in talks with several countries about currency swap deals to boost dwindling foreign reserves and is confident an anticipated $1.9 billion loan from the IMF will not carry too harsh conditions, the central bank governor said on Tuesday.
Sri Lanka's $32 billion economy has been under pressure because of falling earnings from key exports tea and garments. Its foreign currency reserves have been halved in the second half of 2008 as the central bank defended the rupee.
"We are talking to a few countries on currency swaps," Governor Ajith Nivard Cabraal told Reuters on the sidelines of a regional economic forum at the Asian Development Bank headquarters in Manila.
Cabraal declined to name the countries but said the Philippines was not one of them. He did not say how much Sri Lanka sought to secure through the planned currency swaps.
"Different countries, we have different values that we are talking to them about. It is not one single number."
Market sources said last month the central bank has signed a $200 million, six-month currency swap deal with the Malaysian central bank to lift its reserves.
The Sri Lankan rupee has been falling steadily, hitting a record low of 115.75/95 to the U.S. dollar on Feb. 27, since the central bank scaled back its interventions in support of the currency.
At the end of December, Sri Lanka's foreign reserves stood at $1.75 billion, down from $3.56 billion in July and enough to pay for 1.5 months of imports, according to government figures.
Asked if the central bank is targeting a specific level of reserves, Cabraal said: "It's not the amount that is important.
"What is important is your cash flow, so you have to ensure that your cash flow is managed in a certain way that you will always have sufficient inflows to meet your outflows.
"We're confident of the inflows that are coming in, we know what the outflows are going to be."
IMF LOAN
Sri Lanka is in negotiations with the International Monetary Fund for a $1.9 billion loan to help the country cope with the global financial crisis and fund post-war reconstruction.
Government soldiers are close to defeating the Tamil Tiger rebels after a 25-year separatist conflict, and Sri Lankan President Mahinda Rajapaksa has promised major reconstruction efforts in the war-hit northern and eastern parts of the country.
It was a change of heart for the central bank which has said it would not seek funding from the IMF if it would impose loan conditions that would alter Sri Lanka's economic policies.
"There won't be any conditions which are unfavourable to the country," said Cabraal, adding the IMF has been "comfortable" with the policies set out by the government.
"What we're saying is the conditions that we will adhere to will be conditions that are not unfavourable to us, conditions which are consistent with our policy so we won't have a problem," he said.
The central bank has said it expects the negotiations with the IMF to be completed by the end of the month, and that a significant portion of the funds will be disbursed upfront. (Editing by Tomasz Janowski)