The International Monetary Fund's board approved a $2.6 billion (Dh9.5bn) loan deal to help Sri Lanka cope with the global financial crisis and pay for reconstruction after a 25-year war.
But both Britain and the United States abstained from the board discussion in a move reflecting concerns about the Sri Lankan government's human rights record. Months after the end of the civil war with the Liberation Tigers of Tamil Eelam, the Sri Lankan Government continues to hold thousands of Tamils displaced by the fighting in detention camps, according to Human Rights Watch.
"To approve a loan, especially $600 million more than the government asked for, while they have hundreds of people penned up in camps is a reward for bad behaviour, not an incentive to improve," said Brad Adams, Human Rights Watch Director for Asia, in a statement.
Approval of the loan lets Sri Lanka immediately tap the first disbursement of $322m under the 20-month programme. The rest will be phased in, subject to quarterly reviews on how human rights have improved as a result of the loan, an Obama administration official said.
Anura Priyadarshana Yapa, Sri Lanka's Minister of Enterprise Development and Investment Promotion, said on Friday he expected the loan to be approved.
Sri Lanka is "embarking upon a very rapid development programme for the north and east", previously controlled by separatist rebels the government defeated in May, said Yapa.
"We have completely destroyed one of the worst terrorist outfits in the world and it is time to start the reconciling and healing process in our country," said Yapa.
Many people are still in camps because the areas where they lived were mined by the rebels and have to be made safe before they can return, he said.
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