Saturday, July 25, 2009

IMF approves 2.6 bln dlr loan for Sri Lanka

WASHINGTON (AFP) – The International Monetary Fund approved a 2.6-billion-dollar loan for Sri Lanka to support its economic reform program and help the country weather the severe global downturn.

The IMF executive board approved the loan as the Asian country emerges from a 37-year civil war.

The so-called Stand-By Arrangement is in an amount equivalent to 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 20-month loan is worth about 2.6 billion dollars, the IMF said.

A first installment of about 322.2 million dollars is immediately available to Sri Lanka, while the remainder will be phased in "subject to quarterly reviews," the multilateral institution said.

"The key objectives of the authorities' economic reform program supported by the fund are to strengthen the country's fiscal position while ensuring the availability of resources for much needed post-conflict reconstruction and relief efforts."

The IMF said the program also was intended to rebuild international reserves and strengthen Sri Lanka's domestic financial system, "and to protect the most vulnerable in the country from the burden of the needed economic adjustment."

Britain abstained from voting on the loan after politicans indicated they could not support it.

British Financial Secretary to the Treasury Stephen Timms said it was "not the right time for the program," in light of the political situation on the island threatening its success.

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