NEW DELHI. Nov 10 : The international Monetary Fund has agreed in principle to convert a 2.3 billton Dollar standby loan to Indi* approved last month into a five to seven billion Dollar loan next year. Fiance Minister Manmohan Singh said here, reports Reuter.

"It is our intention to ask for the EFF (Extended Fund Facility) and the fund has agreed in principle.' Stnjgh

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Delhi will formally ask the IMF to convert the 18-month stand-by credit to a three-year EFF loan after it presents Its 1992/93 (April March) budget tn late February, he said.

There will be no more conditionality (under the EFF) than what we have now," Singh said. The longer repayment period In another big reason to convert the stand-by credit, the added.

IMF Managing Director Michael Camdessus on a visit to Delhi two week* ago said there would be no problem tn converting the loan but the fund would be looking for sigreforms already in place were irreversible.

The 2.3 billion Dollar stand by loan—on top 2.6 billion Delhi borrowed earlier this year from the fund—has eased a severe foreign exchange crunch that brought India to the brink of default earlier thl* year on its 72 billion Dollar debt.

Singh said the IMF money would remain in the government's offers. India now has 2.1 billion Dollars in foreign exchange reserves and alms to keep them at around 2.5 billion. he said

The IMF Ioan*, coupled with major reform* in India's rule-bound economy, have re* cued the country from it*

worst crisis since independence from Britain in 1947, said Sing" a former central bank Governor.

For the future. India wants as much as possible to replace foreign loans with direct foreign equity investment, he said.

"One objective is to switch from loan* to direct investment." Singh said. The world faces a capital shortage and if* not going to be easy to attract large-scale flow*."

The government now gives automatic approval for most foreign Investment projects and allows the foreign partner to take a majority stake to Joint ventures.

A more open attitude toward foreign investment was also needed to restore the confidence of International leaders In India’s economy, he said.