International opposition to Sri Lanka’s request for a $1.9 billion IMF standby facility appears to be waning while on the other hand there is no immediate urgency for the facility, Central Bank officials and analysts said.
“The US position has changed in recent weeks,” said Central Bank Governor Ajith Nivard Cabraal, adding that Central Bank foreign exchange (forex) reserves have improved in the past fortnight after the end to nearly three decades of conflict.
|Ajith Nivard Cabraal
On Friday, US Congressman Heath Shuler told reporters in Colombo – during a visit with a group of Congressmen – that Sri Lanka deserves the loan for its development. Asked to respond to US State Secretary Hillary Clinton’s statement that this is not the right time to approve the IMF facility, he said that this was not the message he was getting from the authorities and also it is important to separate economic issues from politics.
Mr. Cabraal said ‘our position (vis-à-vis the loan) is strengthening all the time and any time now the request will be put for approval to the IMF board’.
A banking analyst, who declined to be named, said forex was coming in much more than before and the Central Bank (CB) was in fact pumping in dollars into the money market to stabilize the US currency against the rupee which was trading at Rs. 115 per dollar compared to Rs. 118/120, a few weeks back.
Mr. Cabraal said the CB had injected $25 million on Friday and $31 million on Thursday to stabilize the dollar against a stronger rupee, to ensure exporters don’t suffer. Bankers said demand for the US currency had weakened owning to falling import values and more money coming in through a resurging stock-market, remittances and export proceeds.
The CB has added $125 million to the markets in the past week while $140 million ‘of new money to our own reserves (which is in addition to forex coming to other sources)’ has come in, said the CB governor.
According to the TamilNet website, the IMF is seeking to dismiss the case filed by US-based group Tamils Against Genocide (TAG) blocking the loan.
The case was filed on March 30, by TAG in the District Court of the District of Columbia against the US Treasury Secretary Timothy Geithner and the US IMF Executive Director Meg Lundsager, seeking an order that US law prohibited voting in favour of the IMF loan request by the government of Sri Lanka due to ‘its pattern of gross violations of internationally recognized human rights.’
Lawyers, representing the defendants Mr. Geithner and Ms. Lundsager, filed a motion in Court to dismiss the case on the grounds that the plaintiff has no standing, the court lacks jurisdiction, there is no private right of action to enforce ‘policy goals’ and under federal law, both defendants are immune from legal prosecution, according to the TamilNet report this week which could not be independently verified.
TamilNet quoted TAG representatives as saying their Counsel Bruce Fein is reviewing the legal brief considering the developments on this matter in the light of developments in the last several weeks.