UNP warns of dire consequences of seeking high interest loans

The United National Party (UNP) said the government has been asking for ‘unprecedentedly high’ interest of three percent for long-term loan as the country is facing a severe shortage of foreign reserves.

UNP General Secretary, Tissa Attanayake, MP, told journalists in Colombo that President Rajapaksa’s administration is to agree any condition set upon by the IMF and the World Bank in order to receive Rs. 190 billion.

Post-war development

“The same government that blamed the IMF and the World Bank now kneeling down with the same institutions and asking for loans,” he said.

	Mr. Cabraal says money would be used for post-war construction

Sri Lanka's central bank says it is currently holding negotiations with the International Monetary Fund - the IMF - for a loan to help overcome the impact of the current global financial crisis.

In an earlier interview with the BBC, the Sri Lankan Central Bank Governor, Ajith Nivard Cabraal, said the money would also be used for post-war reconstruction of northern and eastern provinces.

However, Mr. Attanayake alleges that the said amount is to be mainly used to pay the foreign currency deficit and consumer needs.

He warned of dire consequences, for future generations, of seeking high interest loans.

Sri Lanka has become the second country after Pakistan in South Asia to approach the IMF for financial help in recent months.