Colombo, June 29 (EFE).- The World Bank announced $700 million in financing for crisis-stricken Sri Lanka on Thursday.
The aid comes after the International Monetary Fund approved in March $3 billion in funding after defaulting on its foreign debt last year as the nation grappled with its worst financial crisis since gaining independence from British rule in 1948.
“The extent of the crisis in Sri Lanka is unprecedented, but offers a historic opportunity for deep reforms to reset the country’s economic storyline,” said Faris H. Hadad-Zervos, WB Country Director for Sri Lanka
The WB aid will 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,” according to a statement.
The package will be splintered into two funding streams, one valued at $500 million to “reforms that help improve economic governance, enhance growth and competitiveness, and protect the poor and vulnerable.”
And another $200 million project targeting “to support Sri Lanka in providing better-targeted income and livelihood opportunities to the poor and vulnerable and improving the responsiveness of the social protection system,” the WB said.
Sri Lanka’s poverty rate is estimated to have doubled from 13.1 to 25 percent between 2021 and 2022—an addition of 2.5 million poor people
The Asian nation faces a yearly debt of around $6 billion for the next five years, ten times more than the foreign currency reserves available.
Sri Lanka’s public debt rose to 128% of GDP in 2022, according to the IMF.
The country’s gross domestic product (GDP) contracted by 7.8% in 2022, and the IMF expects it to contract by 3% in 2023. EFE