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IMF delays third tranche of $2.6 bln Sri Lanka loan
Published on 25 February, 2010 , AFP Email To Friend     Print Version

The International Monetary Fund said on Thursday it is delaying the third tranche of a $2.6 billion loan to Sri Lanka after the government missed its 2009 deficit reduction targets. IMF officials told a news conference that Sri Lanka's domestic budget borrowing -- consistent with a budget deficit target of 7 percent of gross domestic production -- was exceeded by a substantial amount.

"The third tranche will be delayed and completed when the budget is formulated after the election," said Brian Aitken, the IMF mission head to Sri Lanka.

The third tranche is worth just below $2 billion.

The central bank had earlier acknowledged that the $40 billion economy likely missed last year's budget deficit goal of 7 percent set by the IMF as a condition for the loan.

Analysts and economists believe the budget deficit may have exceeded 8.5 percent, close to the 9 percent recorded in 2008. [ID:nLDE61E18Z]

The $2.6 billion loan was granted to Sri Lanka to avert a balance of payment crisis following the global economic crisis on condition that it get its spending under control.

So far, the IMF has released around $650 million to the government based on the fiscal performance of the Indian Ocean island following the end of its long 25-year civil war last May.

The IMF has set an even tougher target for Sri Lanka's budget deficit this year at 6 percent of GDP.

Central bank chief Ajith Nivard Cabraal told Reuters on Tuesday that it would be challenging to meet that level due to high government spending required for post-war reconstruction.

Sri Lanka's newly re-elected president vowed earlier this month to regain the progress lost in the quarter-century war with Tamil Tigers separatists by boosting the country's economy and unifying its people.

Mahidna Rajapaksa was re-elected by a landslide on Jan 26.

Sri Lanka will hold legislative polls on April 8 and the president has postponed the presentation of the budget until those elections are over


Chronology:
09-07-2012 , Be prepared! Sharp turn ahead    Photo
06-10-2011 , IMF demands currency devaluation  
11-06-2011 , Conflicting signals about role of private sector in economic development could deter investment in Sri Lanka – IMF  
11-10-2010 , IMF to discuss Sri Lanka's debt repayment terms  
23-08-2010 , IMF set to approve Sri Lanka loan payment   Photo
29-06-2010 , IMF approves loan of USD 408 mn for Sri Lanka   
29-06-2010 , Sri Lanka seeks to end its cold war  
21-05-2010 , Sri Lanka likely to get delayed IMF millions soon  
14-05-2010 , Sri Lanka says puts own terms for IMF loan  
15-03-2010 , Sri Lanka to request IMF waiver on deficit  
25-02-2010 , IMF delays third tranche of $2.6 bln Sri Lanka loan  
29-09-2009 , Sri Lanka unlikely to lose EU trade scheme yet-diplomats  
22-09-2009 , IMF warns Sri Lanka over borrowing  
21-09-2009 , Committee says lanka has met ‘EU’ conditions  
08-09-2009 , IMF’s Sri Lanka Loan Review Due This Week, Central Bank Says   
28-08-2009 , IMF loan has created a cancer in the country’s economy: Dr. Kumarasinghe  
03-08-2009 , Sri Lanka tax structure to be streamlined  
25-07-2009 , US, UK, France abstain, IMF vote to approve Sri Lanka loan   PDF
20-07-2009 , Sino-Indian factor forces US to help Lanka   
21-06-2009 , Restore democracy say US Senators  
06-06-2009 , Do not approve IMF loan, Senators tell Clinton   Photo PDF
31-05-2009 , EU now wants IMF loan stopped  

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