The World Bank has granted approval for $700 million in budgetary and welfare support to Sri Lanka, marking the largest funding tranche received by the crisis-hit nation since its deal with the International Monetary Fund (IMF) in March. Of the total amount, approximately $500 million will be allocated for budgetary support, while the remaining $200 million will be designated for welfare support, specifically targeting those most severely affected by the ongoing crisis.
In a statement, Faris Hadad-Zervos, the World Bank’s country director for Sri Lanka, highlighted the phased approach of their strategy, emphasizing early economic stabilization, structural reforms, and the protection of vulnerable populations. Zervos expressed optimism that if these reforms are sustained, they have the potential to steer the country towards a path of green, resilient, and inclusive development.
Sri Lanka has been grappling with its most severe financial crisis since gaining independence from Britain in 1948, with record-low foreign exchange reserves and its first-ever foreign debt default last year. In March, the IMF approved a bailout package worth nearly $3 billion. Sri Lanka anticipates additional funding of up to $4 billion from the World Bank, the Asian Development Bank, and other multilateral agencies as part of this initiative.
To address its debt restructuring, the island nation plans to unveil a domestic debt restructuring program this week, aimed at renegotiating its debts with bondholders and bilateral creditors, including China, Japan, and India.
