Sri Lanka's central bank said the comments were "very unfortunate and disturbing" and it was a "slur on the impeccable debt servicing record" of the institution.

The Central Bank said the IMF had given it nine loans in the past 25 years all the loans had been used "very honourably in strict compliance with the terms of disbursement, and repaid such facilities without a single default."

"In fact, Sri Lanka has never delayed or defaulted on any loan, and consequently, has maintained an unblemished record of debt servicing," the monetary authority said in a statement.

"In that context, Hon Miliband's alleged statement is very unfortunate and disturbing, since it casts a slur on the impeccable debt servicing record of the Central Bank of Sri Lanka, as well as Sri Lanka’s deep commitment to meeting its obligations."

The central bank said the comments also displayed "lack of basic knowledge" since IMF facilities are only available to balance of payments support and the question that the government would "utilize IMF money" did not arise.

IMF money goes into the balance sheet of the central bank, which is a separate entity from the finance ministry.

Through the laws covering the central bank, the money supports the external payments of any Sri Lankan entity whether public or private.

Ahead of the loan IMF also started a 'safeguards assessment' to check whether Sri Lanka's central bank had sufficient controls to ensure that loan proceeds would only be used for the purposes intended by the international lender.

Sri Lanka has asked for a 1.9 billion loan from the IMF to boost its reserves.