Sri Lanka denied on Wednesday that it had devalued its currency at the demand of the International Monetary Fund to secure the rest of a $2.6 billion bailout.

Colombo on Monday cut the value of the rupee by three percent against a basket of currencies, despite spending millions of dollars in recent months to defend the unit.

Release of the latest IMF payment had been held up by the Washington-based body’s calls for the island to adopt a “flexible exchange rate policy” to ensure its export competitiveness and protect reserves.

But Sarath Amunugama, senior minister for international monetary cooperation, said: “The IMF concerns are not our priorities.

“We have done it (the depreciation) to meet Sri Lankan priorities” of boosting exports, he told reporters in the capital.

He added that Sri Lanka may not even need the final installment of the bailout as the island’s economy is growing robustly.

“We have foreign remittances of $4 billion (from Sri Lankans employed abroad) and we have eight percent growth,” he said. “We are not in a crisis situation... We are not in a rush for the IMF money.”

“We don’t need that (IMF) money,” Amunugama said, although he added that the government might consider accepting it only because the loan was on concessionary terms.

Sri Lanka obtained the IMF bailout in 2009 when the island’s foreign reserves dipped below $1 billion and the country faced a major balance of payment crisis.

It has drawn $1.8 billion of the package, with the most recent payment coming in April when the IMF released $218.3 million.

Sri Lanka says its economy has been improving steadily since government security forces crushed Tamil rebels in May 2009 and ended a decades-long Tamil separatist war which cost up to 100,000 lives between 1972 and 2009. (AFP)