IMF grants Sri Lanka $2.6bn loan

(July 25, 2009) The International Monetary Fund has approved a $2.6bn loan to help Sri Lanka weather the global economic crisis and rebuild war-torn regions. The first $322m tranche of the 20-month loan is available immediately, with the rest subject to quarterly reviews. Britain and the US abstained from the vote, citing humanitarian concerns during the government's recent fighting against Tamil Tiger rebels. Colombo says the money will be used to start the country's "healing process". Sri Lanka's Enterprise Minister, Anura Priyadarshana Yapa, said the money would pay for post-war reconstruction work in the north and east of the island - areas previously controlled by the rebels. "We have completely destroyed one of the worst terrorist outfits in the world and it is time to start the reconciling and healing process in our country," said Mr Yapa. The conflict has claimed up to 100,000 lives and left some 300,000 civilians displaced in the north of the country. Sri Lanka approached the IMF regarding a loan in March, when its balance of payments fell into deficit for the first time in four years. Meanwhile in a statement Thursday, New York-based Human Rights Watch said the government was holding more than 280,000 Tamil civilians displaced by the fighting in camps and has failed to investigate attacks on journalists and civil society activists. “To approve a loan, is a reward for bad behaviour, not an incentive to improve,” said Brad Adams, the group's Asia director. “The IMF needs to change its approach,” he said.