Sri Lanka still negotiating IMF deal: minister

June 24, 2009 (LBO) – Sri Lanka is still negotiating with the International Monetary Fund for a bailout package, and the first tranche may come in two months, a senior minister said, indicating that an unfinished economic agenda remained to be resolved. “We are still working things out; the doors are not shut yet,” Amunugama told LBO Wednesday on the sidelines of a conference on poverty organized by Sri Lanka’s Institute of Policy Studies, a semi-government think tank.

“We should get the funds in a two months time, so we’ll see.”

The IMF has also been insisting that a deal has not yet been finalized, though Sri Lankan authorities have previously indicated that agreement has been reached.

The central bank floated the rupee in March, which is a prior action to most IMF programs.

Sabre Rattling

The US and the UK has been sabre rattling over the IMF loan, saying Sri Lanka’s ground situation should be looked at before approving a loan. Secretary of State Hilary Clinton went so far as to say in May that a loan was not appropriate at that time.

Yesterday a state department official said US was not blocking the loan but would “carefully assess” the loan based on the “conditions in Sri Lanka at the time.”

The Obama