IMF eyes 2.5 bln dlr loan for Sri LankaThe International Monetary Fund has announced a tentative agreement with Sri Lanka Sri Lanka (srē läng`kə) [Sinhalese,=resplendent land], formerly Ceylon, ancient Taprobane, officially Democratic Socialist Republic of Sri Lanka, island republic (2005 est. pop. to provide a 2.5 billion dollar loan to help the war-battered country weather the global financial crisis.
See: International Monetary Fund
See International Monetary Fund (IMF). managing director Dominique Strauss-Kahn Dominique Strauss-Kahn (born 25 April 1949 in Neuilly-sur-Seine; often referred to as DSK) is a French economist, lawyer, and politician, member of the social-democrat Socialist Party (PS). said that an IMF staff mission had reached an agreement with the Sri Lankan authorities on an economic program that "could be supported" by a 20-month stand-by credit.
The loan is worth 1.65 billion Special Drawing Rights (SDRs), an IMF asset that is based on a basket of currencies -- the dollar, yen, euro and pound -- and calculated daily.
The IMF executive board is expected to consider the program on Friday, the 186-nation Washington-based institution said.
If approved by the board, Sri Lanka would be eligible to draw about 313 million dollars immediately.
The Sri Lankan government had requested a 1.9 billion dollar loan in March to help stave off its first balance of payments deficit in four years after foreign currency reserves fell to around six weeks' worth of imports.
The loan was delayed after the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Britain and other countries said the government was not doing enough to avoid civilian casualties Civilian casualties is a military term describing civilian or non-combatant persons killed or injured by military action. The description of civilian casualties includes any form of military action regardless of whether civilians were targeted directly. as it closed in on the remnants of the once-powerful Tamil Tiger army.
Sri Lanka crushed the militant Tamil Tigers Tamil Tigers
or Liberation Tigers of Tamil Eelam (LTTE)
Guerrilla organization seeking to establish an independent Tamil state in northern and eastern Sri Lanka. -- who had been fighting to carve out to make or get by cutting, or as if by cutting; to cut out.
See also: Carve a separate state for minority Tamils since 1972 -- in mid-May by killing the leadership of the rebels. The civil war claimed between 80,000 and 100,000 lives.
Strauss-Kahn noted that the global financial crisis had applied a sharp brake to the short-term financing from international markets that the Sri Lankan government had relied on to deal with persistently high budget deficits.
"The global financial shock resulted in a sudden stop to this financing, capital outflows Capital outflow is an economic term describing capital flowing out of (or leaving) a particular economy. Outflowing capital can be caused by any number of economic or political reasons but can often originate from instability in either sphere. , and a significant loss of Sri Lanka?s international reserves," he said.
Despite recent capital inflows, the tiny Asian country's international reserves "remain at low levels," he said.
"The end of the conflict provides Sri Lanka with a unique opportunity to undertake economic reform and reconstruction, which would be key to laying the basis for higher economic growth in the years ahead," he said.
The Sri Lankan government in early July raised its 2009 economic growth forecast to a range of 3.5-4.5 percent, from the 2.5-3.0 percent expansion estimated at the beginning of the year.
Analysts said the end of the war with the Liberation Tigers of Tamil Eelam Noun 1. Tamil Eelam - the independent state that the Tamil Tigers have fought for
Democratic Socialist Republic of Sri Lanka, Sri Lanka, Ceylon - a republic on the island of Ceylon; became independent of the United Kingdom in 1948 (LTTE) had opened avenues for wider economic activity and will spur future investments, especially into areas like infrastructure to reap the post-war benefits.
Strauss-Kahn said the government had developed an "ambitious program aimed at restoring fiscal and external viability and addressing the significant reconstruction needs of the conflict-affected areas."
The IMF-supported economic program would also provide a framework for international donors to help finance the government's reconstruction effort.
"The strong measures that the authorities are taking under the program justify the exceptional level of access to fund resources -- equivalent to 400 percent of Sri Lanka's quota in the IMF," Strauss-Kahn said.
The United States, the main shareholder in the IMF and whose approval is key to the release of the money, has welcomed the end to the Sri Lankan fighting but urged Colombo to meet the needs of the roughly 300,000 displaced people who remain in temporary government shelters.
The United Nations has also been at odds with the Sri Lankan government over its treatment of the displaced persons.
Critics say the people in the camps, which are guarded by the military, are being subjected to prison-like conditions.
Sri Lanka's Human Rights Minister Mahinda Samarasinghe Mahinda Samarasinghe is the minister of disaster management and human rights of Sri Lanka since 2006. He co-chairs the Permanent Standing Committee on Human Rights, the other chair being minister of foreign affairs Mangala Samaraweera. He studied Economics. said earlier this month all international relief agencies, including the International Committee of the Red Cross
The International Committee of the Red Cross (ICRC) is a private humanitarian institution based in Geneva, Switzerland. , had been asked to scale down operations following the defeat of the rebels.
The Red Cross on Monday announced the closure of four offices in Sri Lanka following the government order.