World Bank releases US$250 million to boost Sri Lanka reforms
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THE World Bank said on Wednesday (Dec 20) it had released US$250 million to support bankrupt Sri Lanka’s tough economic reforms following last year’s financial crisis.
Sri Lanka defaulted on its US$46 billion external debt in April 2022 after running out of foreign exchange to finance essential imports of food, fuel and medicines, with civil unrest ousting then-president Gotabaya Rajapaksa.
His successor has been pressing tough austerity measures to help restore essential supplies.
The World Bank said it released the second and final tranche of a total US$500 million package “considering the continued satisfactory progress made by the government with the reform programme”.
Sri Lanka has doubled taxes, removed subsidies on fuel and electricity and introduced anti-graft legislation in line with a US$2.9 billion bailout from the International Monetary Fund.
The IMF released the second tranche of US$337 million of its four-year bailout last week, after the country secured a debt restructuring deal with its main bilateral lender, China.
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The economy grew in the September quarter, marking the first expansion since the foreign exchange crisis.
The Central Bank of Sri Lanka said the economy had grown by a modest 1.6 per cent in the quarter ending September, up from a contraction of 11.5 per cent a year earlier.
Despite the positive data, overall figures from the first nine months of the year showed a contraction of 4.9 per cent.
The IMF has forecast Sri Lanka’s full-year GDP growth in 2023 at negative 3.6 per cent. AFP
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