Government Should Address Human Rights Problems Before Receiving $2.5 Billion Loan
July 22, 2009
To approve a loan, especially $600 million more than the government even asked for, while they have hundreds of thousands of people penned up in these camps is a reward for bad behavior, not an incentive to improve. The IMF needs to change its approach.
Brad Adams, Asia Director

(New York) - Members of the International Monetary Fund should insist that the government of Sri Lanka address significant post-conflict human rights abuses as part of the approval for a US$2.5 billion stand-by loan, Human Rights Watch said today. The IMF board is expected to vote on the stand-by arrangement on July 24, 2009. The proposed loan has created intense controversy because of concern over Sri Lanka's serious violations of international humanitarian and human rights law.

Two months after the end of the 25-year-long conflict with the Liberation Tigers of Tamil Eelam (LTTE), the Sri Lankan government continues to hold more than 280,000 people, almost all of them Tamils displaced by the fighting, in detention camps in violation of international law. The government also severely restricts access to the camps by humanitarian organizations, the media, and independent monitors, leaving the displaced vulnerable to government abuse.

"To approve a loan, especially $600 million more than the government even asked for, while they have hundreds of thousands of people penned up in these camps is a reward for bad behavior, not an incentive to improve," said Brad Adams, Asia Director at Human Rights Watch. "The IMF needs to change its approach."

Key IMF members have raised concerns about the loan and condemned Sri Lanka's treatment of the displaced people on numerous occasions. In mid-May, the US secretary of state, Hillary Clinton, said that it was "not an appropriate time" to consider an IMF loan to Sri Lanka. The UK foreign secretary, David Miliband, said, also in May, that "it is essential that any government is able to show that it will use any IMF money in a responsible and appropriate way ... I don't think that that's the case here."

In a statement issued on July 20, however, the IMF announced that it had reached staff-level agreement with Sri Lanka on the loan and that the executive board will vote on the loan on July 24. The $2.5 billion proposed loan is $600 million more than the $1.9 billion originally requested by Sri Lanka in March. If the loan is approved, the stand-by arrangement will allow Sri Lanka to obtain about $313 million immediately and the balance over 20 months.

In the July 20 statement, the IMF managing director, Dominique Strauss-Kahn, said that the loan would help Sri Lanka rebuild its international reserves, reduce its deficit, and support post-war reconstruction efforts in the war-affected north.

Current government policies, however, in failing to respect human rights standards, threaten post-conflict reconstruction, reconciliation, and stability, and thereby undermine the purpose of the loan, Human Rights Watch said. The government continues to hold displaced persons in detention camps in violation of their rights to liberty and freedom of movement, limiting their ability to communicate and talk to others about what happened in the final stages of the war. It prohibits aid agencies from speaking out about poor conditions in the camps and expels critics. Persons suspected of having LTTE ties have been detained incommunicado, contrary to international law, and credible reports indicate that at least some have been mistreated.

The government has blocked all attempts to establish accountability for violations of international humanitarian law during the conflict. Government officials have failed to investigate attacks on journalists and civil society activists and have instead accused them of being in league with the LTTE, equating dissent with treason.

Following the defeat of the Tamil Tigers in mid-May, Sri Lankan military leaders announced plans to expand the size of the army substantially, from 200,000 to 300,000 troops. In addition, the government's policy of confining all internally displaced persons to detention camps means that they are not able to work, and the government or humanitarian organizations must provide for all of their needs. The camps are costing, by one organization's estimate, more than US$400,000 per day. Human Rights Watch said that IMF members should question the government on how it intends to finance these policies while addressing its critical budget shortfalls.

"The IMF board of governors should make the release of each new tranche of funds contingent on tangible human rights progress," said Adams. "Allowing people to choose for themselves whether to stay in the camps and full access for independent monitors should be minimum benchmarks."

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