United National Party (UNP) parliamentarian and economist Harsha De Silva yesterday disputed Central Bank Governor Ajith Cabraal’s claim that Sri Lanka put on hold the US$800 million loan from the International Monetary Fund (IMF) because of the possibility that interest rates would rise to 3.1 per cent.

The country has already received US$1.8 billion of the US$ 2.6 billion loan in seven instalments. However, the IMF withheld the next instalment over a difference of opinion on some matters with the government.

“If we do not draw any fur ther funds we will have to pay only a 1.1 per cent interest rate for the entire loan. But otherwise for the entire loan of $2.6 billion, we will have to pay 3.1 per cent," Mr. Cabraal had said. But Dr. De Silva said it was a down right lie. “We have taken US$1.8 billion. For that, the interest rate will be 1.1 per cent. An interest rate of two per cent will be imposed for the remaining amount only. Therefore, the claim that the interest rate for the entire loan of US$ 2.6 million will increase to 3.1 per cent is totally baseless,” he said and added that the government would now resor t to borrowings from other sources at higher interest rates.

Meanwhile Mr. Cabraal had said the government had secured enough funds for the programme of work scheduled for this year, and there was no need to borrow any more.

Source: Daily Mirror - Sri Lanka