SL does not need IMF money

Sri Lanka said Tuesday it did not need the final tranche of a $2.6-billion IMF bailout thanks to the country’s healthy foreign exchange reserves.

The loan was granted in 2009 by the International Monetary Fund just after the end of the country’s bloody ethnic civil war.

“The need is no longer there. Our (foreign currency) reserves are at fairly comfortable levels,” Central Bank of Sri Lanka governor Nivard Cabraal said.

Sri Lanka had already informed the IMF that it did not need the remainder of the money, he added.

The Indian Ocean island has drawn $1.8 billion of the package, receiving the most recent payment last April when the IMF released $218.3 million.

Sri Lanka negotiated the loan from the IMF during the height of fighting and received the cash two months after the conflict with Tamil separatist rebels ended in May 2009.

The island’s foreign reserves had dropped to a dangerously low level of $1 billion towards the end of the fighting that claimed up to 100,000 lives over nearly four decades.

Sri Lanka used the IMF loan to boost the country’s foreign currency reserves, the central bank said.

Sri Lanka’s reserves stood at $6 billion by the end of 2011, down from a record $8.1 billion recorded in July 2011.

The bank has spent more than $2 billion in recent months to buttress the Sri Lankan rupee against the dollar.

Cabraal said the interest rate to repay the entire IMF loan would also be too costly for Sri Lanka.

“We pay only 1.1 percent interest for the whole loan if we don’t draw down the balance. If we take the balance, we have to pay around 3.1 percent for the entire loan. That’s not economical,” he said. (AFP)