Financial Times

Lending agencies press for co-habitation
International lending agencies have told President Chandrika Kumaratunga they hope she will be able to work together with Prime Minister Ranil Wickremesinghe and that the current free market economic policies will be continued.

The second tranche of $80 million in IMF aid, scheduled to have been approved after the budget, could be delayed because the budget itself has been delayed by recent political developments.

Senior IMF resident representative Jeremy Carter said Kumaratunga explained the current political situation and the reasons for her actions in taking over three ministries when she met him and representatives of the World Bank and ADB.

"The position we took was so that every effort could be made to reduce uncertainty," Carter said. "Current developments had caused some problems. The best way forward is to minimise its impact. We're looking forward to evidence of co-operation between the President and the Prime Minister and we hope the economic policies would continue smoothly."

Carter said Kumaratunga had "stressed that at no time did she intend to interfere with economic policies." He said Kumaratunga had pointed out there had been quite a lot of speculation which she regrets.

Approval of the second tranche of funds under the IMF's $567 million Poverty Reduction and Growth Facility (PRGF) and Extended Fund Facility has been delayed with the delay in presenting the budget, which was to have been on November 12. The first tranche of $81 million was released in April. Carter said the IMF would also have to consider whether economic forecasts and targets and other assumptions have changed with recent developments.

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