INTERVIEW - Sri Lanka says critical juncture for IMF loan

By Paul Eckert, Asia Correspondent

WASHINGTON (Reuters) - Sri Lanka's post-war reconciliation process needs international financial support, its trade minister said on Friday, urging swift action on Colombo's request for a $1.9 billion International Monetary Fund loan.

G.L. Peiris, Sri Lanka's minister of export development and international trade, said it would be "wholly counterproductive" to deny Colombo resources as it moves to heal wounds from a bitter 25-year war that ended last month.

Sri Lanka declared victory over the separatist Tamil Tigers on May 18, but remains under Western pressure over the deaths of civilians in the waning months of the conflict.

Sri Lanka's request for IMF financing got mired in politics after the United States and other Western states were hesitant to move while the final days of the Indian Ocean island nation's war raged, with high casualties.

The IMF has said it is in talks with the authorities on details of an economic program.

Peiris, visiting Washington for meetings with the IMF, World Bank and the U.S. government, said further delays would end up "hurting the achievement of the objectives in which they and we are both interested."

"If the developed countries are going to cut off resources at this time, that is ironical, because now is a time to infuse greater resources," he told Reuters in an interview.

Sri Lanka's government needs to resettle war refugees, create jobs in depressed areas formerly run by the Tamil Tigers, and get the economy growing again amid a world recession that has hurt textile and tea exports, he said.