ISAS Insights

The United States' government that wields considerable influence at the International Monetary Fund (IMF) has sought to delay the US$1.9 billion loan appeal by Sri Lanka in the context of an unfolding humanitarian crisis in the island. The Sri Lankan government, which has promised that it is at the end of its endgame with the Liberation Tigers of Tamil Eelam (LTTE), is seeking funds for the reconstruction of the northeast conflict-affected region, among other things. Colombo argues that it is fighting a 'war on terror'. Clearly, Colombo needs the IMF loan to service its external debt as a result of soaring defence expenditure and external borrowings which are also related to controversial oil-hedging deals.