Sri Lankan parties close ranks to get IMF loan

Amid spiralling budget deficit, concerns are growing that aid might be blocked in retaliation for Colombo's rejection of a truce as it fought the Tamil Tigers.

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COLOMBO // Opposition parties in Sri Lanka may bellow in parliament about the wrongdoings of the president, Mahinda Rajapaksa, and his government, but they are standing united with him on one key issue - securing an IMF loan of US$1.9 billion (Dh7bn).

In fact, MPs from many parties are closing ranks, putting aside difference and working together to get the standby facility, which will significantly reduce a spiralling budget deficit triggered by the global economic crisis. Kabir Hashim, a parliamentarian from the main opposition party, the United National Party (UNP), says that whatever the faults might be of the government, the country sorely needs the IMF loan and that it would be unfair if it was not given.

Last month, as government troops were closing in to destroy the last remnants of the Liberation Tigers of Tamil Eelam (LTTE) rebels in northern Sri Lanka, the international community called for a ceasefire and urged restraint, in order to minimise civilian casualties. This call was backed by a demand from the US and Britain to the IMF to suspend the loan request, after Mr Rajapaksa rejected ceasefire calls from world leaders, including Ban Ki-moon, the UN secretary general.

After a UN security council meeting in mid-May, Hillary Clinton, the US secretary of state, and David Miliband, the British foreign secretary, urged suspension of the IMF facility after Sri Lanka's repeated refusal to bow to international requests for a ceasefire and a halt to the fighting. International pressure and western influence over the IMF has sparked worries that the loan might not be approved, in retaliation for Colombo's rejection of international appeals during the operation against the Tigers.

Sri Lankans fear that the loss of the IMF loan could have dire consequences for them, not the government. "Sri Lanka needs this loan and it's unfair for the world to stop it," said Samanpriya Jayawickrema, a taxi driver in Colombo. His views were echoed by many others in the streets of Colombo. Raj Perera, a vegetable vendor, said: "Depriving Sri Lanka this money is like victimising all her people, including the Tamils. Does the world want this to happen?"

Mallya de Silva, an office worker, said: "It's great that the government and the opposition think alike. I hope this would happen in the future too when we seek a long-term solution to peace." In fact, the head of a peace-promoting, foreign-funded non-governmental organisation said there was pressure on local NGOs that are dependent on foreign funds to support economic sanctions on Sri Lanka by some countries, such as the United States, to teach the government a lesson for alleged human rights violations.

"How can I recommend this when it's our people who would suffer ? not politicians, not the elite?" said the NGO worker, who declined reveal his identity or the name of the organisation he works for. In recent weeks, despite all misgivings and criticism, the UNP and its allies have rallied together and are seeking quick approval of the loan. In parliament on May 26, Rauf Hakeem, the leader of the Sri Lanka Muslim Congress (SLMC), called for a combined government-opposition appeal to the IMF to approve the loan.

He said Sri Lanka was facing a serious balance of payments crisis with the country's foreign reserves dropping to just $800 million earlier this year from over $3bn a year ago. Sri Lanka's central bank made the loan request nearly two months ago after remittances from migrant workers and other sources of liquid assets fell, depleting foreign exchange reserves. The IMF had been favourable to the request and sent several missions to Colombo for loan discussions.

In recent days, however, that opposition appears to be waning. During an interview last week in Colombo with the Wall Street Journal, the central bank governor Ajith Nivard Cabraal waved the IMF book on governance at the surprised reporter. "Show me where it states that IMF loans will be given based on non-economic considerations?" he said. Last Friday, US congressman Heath Shuler, who was visiting Colombo with a team of representatives, said Sri Lanka deserved the loan and brushed aside Mrs Clinton's statement, saying that it was not the message he was getting from other administration officials. He told reporters that it was important to separate economic issues from political ones.

In the same week, an IMF spokesman told a news conference in the US that discussions on the loan were at an advanced stage and that the process had not stopped. Even a pro-Tamil rebel group, which challenged the loan request in a US court, was last week considering giving up its fight in light of the Sri Lankan army's defeat of the LTTE and the death of its leader, Velupillai Prabhakaran. After the entire hullabaloo, urgency for the loan has dissipated somewhat. Last week, Mr Cabraal said the central bank's reserves have improved in the past fortnight after the war ended, with some $140m coming in from increased remittances from overseas workers, and export proceeds. "There is no urgency for the IMF loan," he said.

As Sri Lankans rejoice over the end of a bloody conflict, they can also be heartened by the fact that the government and opposition came together on a national issue, perhaps an auspicious sign before the intense political wrangling of the coming months, as Sri Lanka begins to chart a new course after decades of war.