World Bank to provide $700 million to debt-ridden Sri Lanka as economic crisis deepens

As Sri Lanka continues to face economic turbulence, the worst ever since the country became independent in 1948, the World Bank said it will disburse nearly $700 million to the island nation in the next few months. The major development came after the World Bank's Country Manager in Colombo, Chiyo Kanda held discussions with the Sri Lankan Minister of Foreign Affairs GL Peiris on the current situation of the country last week. During the most awaited meeting, Kanda assured him that the agency will work with the Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB) and the UN office to re-purpose their already committed projects.

"Minister Peiris sought assistance from the World Bank until long term assistance materialises through the IMF, other international institutions and donor countries," Colombo Gazette said, quoting a statement from Sri Lanka’s Foreign Ministry.

Last month, the Sri Lankan government and the International Monetary Fund (IMF) held the first round of meetings. During the meeting, IMF assured to help the debt-ridden country with an amount of $300 million to $600 million. On May 26, the IMF team led by Peter Breuer and Masahiro Nozaki conducted a virtual mission with the Sri Lankan authorities. According to the statement released by IMF, the international financial institution team held technical discussions on a comprehensive reform package to restore macroeconomic stability and debt sustainability in Sri Lanka.

"IMF staff will continue to monitor the economic and political situation very closely and engage with the authorities to formulate concrete measures under an IMF-supported program, as well as broader stakeholders to support a timely resolution of the crisis. We reaffirm our commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies," it said in a conclusion statement released on May 26.

Sri Lanka crisis

The island nation has been experiencing its worst economic crisis in history. The country has huge debt obligations and dwindling foreign reserves, and has been struggling to pay for imports, causing a shortage of essentials. Citizens were forced to stand in long queues for fuel, cooking gas, and medicines. Amid the crisis, India handed over a large amount of humanitarian assistance consignment worth over Rs 2 billion to the island country which reached Colombo on Sunday, May 22. According to the Indian government, the consignment included 9,000 metric tons of rice, and 50 metric tons of milk powder, coupled with over 25 metric tons of drugs and other pharmaceutical supplies.

Image: AP