IMF delays Rs. 7.5 billion tranche, as WB talks on aid package held up
The IMF has delayed a US dollars 80 million (Rs. 7.5 billion) tranche release to Sri Lanka under its Poverty Reduction and Growth Fund (PRGF) while the start of the Second Poverty Reduction Credit for release by the World Bank for the first quarter of 2004 and poverty alleviation outcomes have both been held up due to this week's constitutional crisis, financial sources told The Sunday Times last night.

IMF and World Bank officials met in Washington D.C. this week to discuss economic tranches to Sri Lanka. The decisions to delay finality to these aid packages come in the midst of a delay in announcing an 'intention' by the United States to negotiate a Free Trade Agreement (FTA) with Sri Lanka and a sentiment "not to reward bad behaviour" in the US Congress.

Earlier, UNF Government spokesman G.L.Peiris was rebuffed by the US for making a claim that due to President Chandrika Kumaratunga sacking three ministers and proroguing Parliament, the US Government had failed to announce the FTA with Sri lanka during the visit of Prime Minister Ranil Wickremesinghe.

Prof. Peiris told a news conference that the US government wanted Parliament to function, before proceeding with the agreement. Sources told The Sunday Times that Prof. Peiris' claim was an "embarrassment" to the UNF Government because it was false to say that any announcement was due and that Prof. Peiris was aware that such an announcement could not have been made at this stage of negotiations between negotiators from Colombo and Washington on the FTA.

Reports from Washington D.C., however, did refer to Sri Lanka which was short-listed along with Thailand, Bahrein, Columbia and Peru for FTAs, being a question mark for future FTA talks because of political developments in Sri Lanka at a time the prime Minister was visiting Washington as a guest of President George Bush.
One of the criteria the US administration uses in selecting FTA partners is whether an FTA can spur social changes in a country such as the promotion of democracy, the sources added.

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