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IMF approves Sri Lanka loan despite unchanged human rights situation

By Stephen Keim - posted Thursday, 30 July 2009

The Executive Board of the International Monetary Fund (IMF), on July 24, approved a US$2.6 billion loan to Sri Lanka despite the fact that the Sri Lankan government has done little to ease continuing human rights concerns in the two months since the end of the conflict with the Liberation Tigers of Tamil Elam Elam (LTTE).

Human Rights Watch had urged that the IMF insist that the government of President Rajapaksa address significant post-conflict human rights abuses as part of the loan approval process. Human Rights Watch said that more than 280,000 people, almost all of them Tamils, continue to be held in detention camps; the government restricts access by humanitarian organisations, the media and independent monitors to those camps; and suspected LTTE fighters are being held incommunicado in breach of international law.

“To approve a loan … while they have hundreds of thousands penned up in these camps is a reward for bad behaviour”, said Brad Adams, Asia Director of Human Rights Watch.


The announcement by the IMF makes repeated reference to the need to provide for the significant reconstruction needs of the conflict-affected areas; the need to provide for the most vulnerable; and the opportunity provided by the ability to reduce military spending. There is, however, no reference to the need to cease the specific human rights abuses referred to by Human Rights Watch.

The loan only makes approximately a sixth of the credit available immediately and further advances are subject to quarterly reviews.

Lanka Business Online, drawing on reports from the UK’s Guardian, has suggested that a number of western countries, including the United States, France and Germany, had abstained on the vote at the IMF. Britain also abstained. Sweden has closed its embassy in Colombo as a result of its concerns about the government’s actions which included large scale shelling of civilian populations by the Sri Lankan Defence Forces in the closing stages of armed hostilities.

There seems to be a muted awareness, even in the halls of the World Bank and the IMF, that the behaviour of the Sri Lankan government is unacceptable from any human rights perspective. In the circumstances, the approval of the loan seems an unusual way to proceed. The terms of the loan have not yet been made public. Perhaps, between the need for future instalments to be approved and as yet unknown aspects of the terms, there is an element of stick among the very generous carrot that the loan comprises.

The Sunday Leader (the newspaper of Lasantha Wickrematunge, the editor who was murdered for his work on January 8, this year, and who had already written his posthumous editorial) reports another IMF official, Mr Strauss-Khan, emphasising the need for the Sri Lankan government to work with the international donor community as part of carrying out its commitments pursuant to the loan. Mr Strauss-Khan said: “This programme will also provide a framework for international donors to assist the government in financing its reconstruction effort. I would like to call upon the Sri Lankan authorities to work with the donor community to ensure an adequate level of financing for the reconstruction effort to lay the foundation for future growth.”

The displaced persons are still in internment camps. Access to those camps by international organisations remains very limited. In the circumstances, the IMF appears to have taken on quite a responsibility, bailing out the Sri Lankan government on a hope and a prayer when other observers have perceived no change for the better in the conduct of that government.


The date of the first quarterly extension will be a time for active discussion. Will the IMF have been a catalyst for drastic improvement? Or will they just have put off the hard decisions for another day? Or will they just roll over and let the internment camps become a permanent feature of the Sri Lankan landscape?

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About the Author

Stephen Keim has been a legal practitioner for 30 years, the last 23 of which have been as a barrister. He became a Senior Counsel for the State of Queensland in 2004. Stephen is book reviews editor for the Queensland Bar Association emagazine Hearsay. Stephen is President of Australian Lawyers for Human Rights and is also Chair of QPIX, a non-profit film production company that develops the skills of emerging film makers for their place in industry.

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