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US will not oppose IMF balance of payments support to Central Bank

Although in legislation placed last week before Congress, Sri Lanka’s application for a USD 1.9 billion facility is being resisted by the US, a way out to grant this facility has been incorporated in the amendments proposed by Senator Leahy with Senators Brown and Casey, well informed sources said yesterday.

These Congressmen, while calling on the US Secretary of Treasury to instruct the US Executive Directors of international financial institutions "to vote against any loan, agreement or other financial support for Sri Lanka, except for basic human needs," has left what analyst’s called an ``escape clause’’ enabling balance of payments support to the Central Bank if the Treasury Secretary certifies ``that such payments are necessary to prevent significant and imminent hardship among the general population of Sri Lanka.’’

The amendment now before Congress requires the Secretary of State to certify to the Committees on Appropriations ``that the Government of Sri Lanka is respecting the rights of internally displaced persons, accounting for persons detained in the conflict, providing access to affected areas and populations by humanitarian organizations and the media, and implementing policies to promote reconciliation and justice, including devolution of power to local bodies as provided for in the Constitution of Sri Lanka" for the US to back the IMF facility.

However a second paragraph to the amendment includes the proviso that balance of payments support to the Central Bank is permitted to prevent general hardship.

Central Bank Governor Ajith Nivard Cabraal said yesterday that what Sri Lanka needs is balance of payment support to the Central Bank and that the IMF in any case deals with Central Banks and not with governments.

"We are quite comfortable with the proviso," he said.

The amendment has also required the Secretary of State to report to the Committees on Appropriations detailing incidents during the conflict in Sri Lanka "that may constitute violations of international humanitarian law or crimes against humanity, and, to the extent practicable, identifying the parties responsible."

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