(Reuters] – Sri Lanka should tighten monetary policy and raise taxes, according to a top International Monetary Fund (IMF), official on Tuesday.

This country, home to 22 million people, has applied for loans from IMF in order to help pay imports. It has been struggling with crushing debt as well as a steep drop in its foreign currency reserves which has fuelled soaring inflation.

Anne-Marie Gulde-Wolf was the acting director for IMF’s Asia and Pacific Department. She spoke at an online news conference.

Ali Sabry, Sri Lanka’s Finance Minister, was visiting Washington last week in order to discuss financing assistance for the country. The IMF, World Bank and India have suspended some payments to Sri Lanka on its $51 billion external debt.

Gulde Wolf said that fund lending is a prerequisite for debt sustainability. Sri Lanka should take steps to improve tax revenues in order to pay for critical spending.

She stated that “Monetary policies must be tightened in order to maintain inflation under control.” Flexible exchange rates are needed, we believe.

Gulde Wolf didn’t respond to a question about the IMF packages total value, or when Sri Lanka would conclude the negotiations.