A six-member IMF team left for Washington on Friday night after a three-day visit to Colombo heightening hopes in financial circles that that issues connected with the USD 1.9 billion facility that Sri Lanka has applied for are being sorted out and that disbursements will begin in the short term.
Technical issues that had previously been cleared in March, creating confidence that the facility will be available from April, have now changed since a new ground situation arose following the end of the war and the defeat of terrorism in May and changes in the language of the previously agreed letter of intent became necessary, well informed sources said.
Events moved rapidly last week with the US Charge d’Affaires James Moore calling on both Central Bank Governor Ajith Nivard Cabraal and Foreign Secretary Palitha Kohona last week saying the US has on no occasion, either publicly or privately, threatened to block the IMF loan to Sri Lanka on political grounds.
The foreign ministry said that the meeting with Kohona was initiated by Moore. This was so with the meeting with Cabraal too, officials said.
"He (Moore) explained that the decision will be taken by the Executive Board of the IMF, of which U. S. is a member, based only on economic criteria and not political factors. He also added that the U. S. Government and other members of the Board will review and consider the loan on financial and economic criteria after such time when the Government of Sri Lanka submits the Letter of Intent to the IMF," a foreign ministry news release said last week.
However, Secretary of State Hillary Clinton, at a news conference in Washington May 14, before the final defeat of the LTTE, responded to a question at a State Department news conference saying, `` We have also raised questions about the IMF loan. At this time, we think that it is not an appropriate time to consider that until there is a resolution of this conflict. And that’s what we’re focused on trying to help bring about.’’
Moore’s assurance suggest that US which has substantial voting muscle at the IMF’s executive board, even if it does not support Sri Lanka’s application, will not oppose it, diplomats and analysts believe.
The Central Bank remained tight-lipped about the current state of play, only saying that the technical aspects of the negoitiations have been completed. Officials were hopeful that disbursements could begin in the short term.