IMF

Sri Lanka's rupee and stock market .CSE fell on Wednesday on concern over doubts on a $1.9 billion International Monetary Fund (IMF) loan after a British minister hinted at withholding it to punish Sri Lanka...

However, the Central Bank Governor Ajith Nivard Cabraal told Reuters the views expressed by individuals were political speculation.

U.N. Security Council members see no point withholding an IMF loan or taking other steps to punish Sri Lanka, the council's president said, the same day Sri Lanka's president rejected international calls for a ceasefire with rebels.

"I have not heard anyone suggesting that," Mexican Ambassador Claude Heller, president of the 15-nation council, told reporters on Thursday after an informal session on Sri Lanka.

Sri Lanka has denied reports that a proposed loan from the International Monetary Fund (IMF) is being delayed by the US, officials say.

American officials said the move was aimed at putting pressure on Colombo to do more to help civilians caught up in the fighting in the north.

But a senior Sri Lankan official says the talks are on schedule.

Sri Lanka has been holding talks with the IMF for a loan of nearly a $2bn to weather the global economic crisis.

International concern

Sri Lanka’s central bank reduced interest rates for the fourth time in as many months to bolster an economy growing at the weakest pace since 2001.

The Central Bank of Sri Lanka cut the repurchase rate to 9 percent from 10.25 percent and lowered the so-called penal rate to 13 percent from 14.75 percent, according to a statement on the bank’s Web site today. The Colombo-based central bank left its reverse repurchase rate unchanged at 11.75 percent.

"This is a home brewed macro economic crisis," Razeen Sally from the London School of Economics, said in Colombo.

"It is not a result of global forces for the most part..."

Sri Lanka has gone to the IMF several times either for bailouts or for comprehensive reforms to put the island on a higher growth path, some of which were abandoned in mid-program.

"There is always a ritual dance at work with these aid conditionality packages. The lending organizations are in the business of shoving money out of the door," observes Sally.