Financial Times

IMF ready to give $160m emergency aid on concessional terms
The International Monetary Fund stands ready to provide Sri Lanka emergency financial assistance of around $160 million on concessional terms and is also prepared to resume talks on economic development aid once the more pressing tsunami relief work is over, visiting IMF First Deputy Managing Director Anne O. Krueger said.

The IMF has already approved an extension in the repayment schedule of previous assistance provided to Sri Lanka which will have the effect of reducing debt service payments by about $114 million this year, she told a news conference.

Krueger held talks President Chandrika Kumaratunga, Finance Minister Sarath Amunugama, Central Bank Governor Sunil Mendis and other senior ministers and officials. "The IMF stands ready to do whatever is appropriate to help in the recovery effort," she said. "It will take years to repair the damage."

Krueger said she was impressed with the relief work done so far and said that progress in the first phase of the recovery is well advanced. The IMF's main role in the aftermath of disasters is to help countries maintain macroeconomic balance and financial stability.

"The Fund stands ready to resume discussions on an economic recovery programme that can be supported under the Poverty Reduction and Growth Facility once the immediate tasks of humanitarian relief and reconstruction planning have been addressed," Krueger said.

Disbursements under the $567 million Poverty Reduction and Growth Facility (PRGF) and Extended Fund Facility were held up owing to political changes and the inability of the government in power to stick to IMF conditions. Krueger also said the IMF is willing to provide technical assistance to Sri Lanka to assess the macroeconomic impact of the tsunami tragedy, and the budgetary and balance of payments needs that might arise as a result.

An IMF team could be dispatched from Washington at the appropriate moment, she added.

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