The International Monetary Fund has approved a $2.6 billion loan to Sri Lanka to help it tide over the global economic crisis and rebuild war-torn regions in the country.
The first $322-million tranche has been made available for immediate disbursal with the rest subject to quarterly reviews. The entire amount would be made available over a period of 20 months.
While Britain and US abstained from voting citing humanitarian concerns during the government's recent fighting against the Tamil Tiger rebels, Colombo said the funds would go toward starting the 'healing process' in areas in northern and eastern parts of the island which were previously controlled by the rebels.
The loan comes two months after government forces crushed the Tamil Tiger rebels putting an end to the bitter conflict that ravaged the country for 37 years.
British financial secretary to the treasury, Stephen Timms said the timing of the programme was not right in view of the political situation on the island which threatened its success.
Timms wrote in a letter to the multi-party groups on Sri Lanka and Tamils that Britain wanted to establish long-term peace and prosperity for Sri Lanka through reconciliation between its communities.