US leans on Sri Lanka IMF bailout

April 20, 2009 (LBO) – The United States, which has called for a political package to end Sri Lanka’s internal conflict and expressed concern over civilians caught in fighting, is flexing its muscles over an International Monetary Fund (IMF) bailout for the island. Sri Lanka has applied for at least 1.9 billion US dollars from the global monetary watchdog with the country’s reserves running low over the past six months.

Developed nations provide the bulk of IMF funding with the US Treasury and Europe having the most clout.

“On any IMF program the department of the Treasury takes the lead,” a US embassy spokesman said.

“They are consulting with the State Department and other US government agencies.”

The spokesman said all other IMF deals also followed the process.

The US State Department drives the country’s foreign policy.

Though the US has broadly backed a campaign against Tamil Tigers, it wants a political package for Sri Lanka and has called on both sides of the conflict to halt fighting “until more than 140,000 civilians in the conflict area are safely out.”

“We call on the Sri Lankan government to put forward a proposal now to engage Tamils who do not espouse violence or terrorism, and to develop power sharing arrangements