World Bank approves $700M aid for crisis-hit Sri Lanka

World Bank approves $700M aid for crisis-hit Sri Lanka; $500M for budgetary support, $200M for welfare assistance.

_{^{Sri Lanka is currently grappling with its most severe financial crisis since gaining independence from Britain in 1948. (Photo: Reuters)}}

The World Bank has approved $700 million in funding for Sri Lanka, providing both budgetary and welfare support to address the country’s ongoing crisis. This funding marks the largest tranche of financial assistance since the International Monetary Fund (IMF) agreement in March.

Approximately $500 million will be allocated for budgetary support, while the remaining $200 million will be designated for welfare support, targeting those most severely affected by the crisis. The World Bank’s strategy for Sri Lanka emphasizes phased economic stabilization, structural reforms, and the protection of vulnerable populations.

According to Faris Hadad-Zervos, the World Bank’s country director for Sri Lanka, if these reforms are sustained, they have the potential to lead the country towards green, resilient, and inclusive development.

Sri Lanka is currently facing its most severe financial crisis since gaining independence from Britain in 1948. The country experienced record lows in foreign exchange reserves, leading to its first foreign debt default in the previous year.

To address this crisis, the International Monetary Fund (IMF) approved a bailout package of nearly $3 billion in March. Sri Lanka anticipates that this approval will attract additional funding of up to $4 billion from other multilateral agencies such as the World Bank and the Asian Development Bank.

In an effort to tackle its debt burden, Sri Lanka intends to launch a domestic debt restructuring program this week. This initiative aims to renegotiate its debt with bondholders and bilateral creditors, including China, Japan, and India.

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Toshika Chauhan