World Bank approves USD 700 million for crisis-hit Sri Lanka

COLOMBO (TIP): The World Bank has approved USD 700 million in financing to help Sri Lanka to recover from the current economic crisis and provide relief to the poor and vulnerable people, the biggest funding tranche since the IMF deal in March. Cash-strapped Sri Lanka is currently struggling with the worst economic crisis in history. In 2022, the economy had contracted by over seven percent as the economic difficulties forced people to take to the streets with protests across the island nations that also led to the ouster of Sri Lanka’s powerful Rajapaksa family from politics. The World Bank Board of Directors approved USD 700 million in financing to help Sri Lanka to recover from the current economic crisis and provide relief to the poor and vulnerable people, the Washington-based bank said in a press release. Of this amount, USD 500 million have been assigned for budgetary support and USD 200 million for social security. This is the biggest financial relief to Sri Lanka since the International Monetary Fund (IMF) reached an agreement with Sri Lanka last March to provide an Extended Fund Facility of USD 2.9 billion. In March, the IMF approved a USD 3 billion bailout program to help Sri Lanka overcome its economic crisis and catalyze financial support from other development partners, a move welcomed by Colombo as a “historic milestone” in the critical period. Sri Lanka has been hit hard by a catastrophic economic and humanitarian crisis, sparked by years of mismanagement and the raging pandemic. The World Bank said its Board of Directors approved USD 700 million in financing for two operations to help Sri Lanka implement foundational reforms that restore macroeconomic stability and sustainability, mitigate the impact of current and future shocks on the poor and vulnerable, and support an inclusive and private- sector-led recovery and growth path. The Sri Lanka Resilience, Stability, and Economic Turnaround (RESET) Development Policy Operation (USD 500 million) will support reforms that help improve economic governance, enhance growth and competitiveness, and protect the poor and vulnerable. (PTI)