Sri Lanka dismisses US threat to hold back IMF loan

May 15, 2009 (AFP) – Sri Lanka dismissed Friday a US threat to link a nearly two-billion-dollar IMF bailout package to ending the war-torn island’s humanitarian crisis. Despite Clinton’s remarks, Cabraal said he was confident the rescue package would be approved.

“There are conflicts in many countries and I don’t think the IMF will set an unnecessary and unmanageable precedent to deviate from their governance structure,” he said. The lending rules of the International Monetary Fund did not suggest political factors could be looked at when deciding on funding, said Central Bank of Sri Lanka Governor Nivard Cabraal.

“There is nothing in the governance structure of the IMF to indicate any political consideration be taken into account” when approving the extension of funds to an IMF member country, Cabraal told AFP.

He said Colombo was seeking 1.9 billion dollars from the IMF to help tide it through the global financial crisis.

US Secretary of State Hillary Clinton said Thursday it was not the right time to consider the bailout as Colombo and the Tamil rebels had failed to stop fighting which the UN says has led to a “bloodbath” for civilians.