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| Sri Lanka |
| Sri Lanka secures IMF lifeline |
| 2009-07-23 |
| COLOMBO - After months of being at the receiving end of international criticism for human rights violations, Sri Lanka finally clinched a crucial agreement with the International Monetary Fund (IMF) on Tuesday for a standby credit facility of US$2.5 billion. This which will bolster the country's foreign exchange reserves, depleted by the impacts of the global economic downturn and an expensive war. IMF managing director Dominique Strauss-Kahn said in a statement that was cheered by Colombo's stock markets on Tuesday that a staff mission had reached agreement with the Sri Lankan authorities, and the program is expected to be considered by the fund's executive board on July 24. Its approval "would enable Sri Lanka to draw an amount of about US$313 million immediately". Though, technically, the final decision will only be known once the approval comes, Sri Lanka central bank governor Ajith Nivard Cabraal told Inter Press Service that the board meeting is just a formality. "We have reached [the] agreement," he said. In February, Sri Lanka requested an IMF credit facility of $1.9 billion urgently needed to shore up sagging foreign reserves adversely hit by the combined force of lower revenues from export income and rapid withdrawals by foreigners who had invested in government bonds. By December 2008, gross official reserves stood at $1.7 billion compared with $3.5 billion in the previous year. This money was barely enough to sustain 1.5 months of imports. Share prices in the Colombo stock market climbed sharply on Tuesday in reaction to the news. Brokers said the news was expected to boost confidence in the market and again entice foreign investors to return to Sri Lanka. The end of a nearly three-decade long conflict in May is also expected to trigger a surge in investments. While most IMF standby credit facilities are approved quickly, considering they are usually meant to offset contingencies, the Sri Lankan application was delayed amid allegations of mounting civilian deaths and other human rights allegations as the government entered the final phase of its war with Tamil Tiger rebels. |
| Posted by:Steve White |
| #2 Yup, that's how I read it. China puts their thumb on the scale and the West ponies up the cash. Wotta system. |
| Posted by: Steve White 2009-07-23 08:12 |
| #1 China uses its influence to help its newest ally. |
| Posted by: gromky 2009-07-23 00:40 |