Sri Lanka will not accept any conditions on emergency loans it receives from the International Monetary Fund, the island's president was quoted on Tuesday as saying. Sri Lanka announced earlier this month that it had become the latest nation to seek help from the IMF to help it through the global economic downturn.
"We are absolutely clear. We will not pawn or sell our motherland to obtain any monetary aid from the IMF or any other international agency," President Mahinda Rajapaksa was quoted as saying by the state-controlled Daily News newspaper. "Neither will we bow down to any conditions or transform our land to a colony," he was quoted as telling a meeting new government employees.
The government is currently in talks with the IMF about an emergency loan worth $1.9 billion.
In the past, the IMF has required countries to take steps such as cutting public spending and raising interest rates in exchange for emergency funds. The IMF has closed its Sri Lankan office and IMF officials were not immediately reachable.
The island's central bank has said an emergency loan would help the country weather the global financial crunch and pay for reconstruction in the north and east, where the army says it is close to defeating Tamil Tiger rebels.
It says the injection would also encourage other "development partners" to step forward with assistance and would boost investors' confidence in the island nation's economy. The government has softened its opposition to an IMF bailout as slowing exports and the costs of the 25-year civil war weigh on the economy. Slowing tea and textile exports have depleted the country's foreign currency reserves and undermined the Sri Lankan rupee.
IMF support would "supplement the government's efforts to stabilize the external sector performance of the country, and enable the country to face the times ahead with greater confidence and certainty," the bank said in a statement earlier this month.
The central bank says it expected the government to finish the IMF negotiations by the end of March, and that significant part of the loan would be released soon after that.