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IMF says Sri Lanka loan talks in advanced stage
May 21, 2009 / 7:45 PM / 9 years ago

IMF says Sri Lanka loan talks in advanced stage

WASHINGTON (Reuters) - Discussions between the International Monetary Fund and Sri Lanka on financial aid are in an advanced stage, an IMF spokeswoman said on Thursday.

The IMF nameplate displayed on a wall at the headquarters in Washington in this April 11, 2008 file photo. REUTERS/Jonathan Ernst

A proposal to lend to Sri Lanka is expected to be considered by the IMF board in coming weeks, spokeswoman Caroline Atkinson said. An agreement between Sri Lanka and an IMF staff mission is necessary before the matter can be presented to the IMF board.

“We’re at an advanced stage in discussions with the authorities,” Atkinson told reporters. “We look forward to being able to bring a program to the board for its approval in coming weeks.”

Washington sought to delay the IMF loan to Sri Lanka while fighting was still raging as a way of pressuring Colombo to do more to help civilians caught in the cross-fire in its battle against Tamil Tiger separatists in the north of the country.

Since then, however, the Sri Lanka government has declared victory in its 25-year civil war after rebel leader Vellupillai Prabhakaran was killed, putting the entire nation under government control for the first time since 1983.

Atkinson said the IMF welcomed the end of the hostilities.

Asked whether political conditions in Sri Lanka would allow the government to implement an IMF program, Atkinson said: “When the IMF board makes a loan, we are also making a judgment on the ability of a government to carry out the policies we see as necessary.”

It is unclear whether the United States still believes the timing is wrong for the IMF to consider a loan to Sri Lanka, the position taken by U.S. Secretary of State Hillary Clinton a week ago.

Clinton was noncommittal when asked if she had changed her mind. Another U.S. official stressed Washington wanted Colombo to promote political reconciliation by sharing power with the Tamils and to allow aid groups access to the former war zone.

“We are working with the Sri Lankan government,” Clinton told reporters when asked whether it was now time for the IMF to consider a loan. Clinton said that she and Sri Lanka President Mahinda Rajapakse on Thursday discussed steps that are “very important for the healing and reconciliation of the nation.”

“I pledged our support and will continue to follow closely what is happening there,” she said.

U.S. State Department spokesman Ian Kelly earlier told reporters that the United States wanted to see political reconciliation as well as access for aid groups such as the International Committee of the Red Cross.

“We believe that the Sri Lankans must win the peace by focusing on power-sharing arrangements with the Tamil and other minorities,” Kelly said, reflecting the U.S. view that without a political accommodation the conflict will fester.

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