World Bank Approves $700 Million Support Package for Sri Lanka’s Economic Recovery
In a significant funding initiative, the World Bank has sanctioned $700 million in budgetary and welfare support for Sri Lanka, marking the largest tranche of financial assistance for the crisis-stricken country since the International Monetary Fund (IMF) agreement in March.
Out of the total funds, approximately $500 million will be allocated for budgetary support, while the remaining $200 million will be specifically designated for welfare support to aid those hardest hit by the ongoing crisis.
In a statement, Faris Hadad-Zervos, the World Bank’s country director for Sri Lanka, highlighted the institution’s phased strategy, emphasizing early economic stabilization, structural reforms, and the protection of the vulnerable population. Zervos expressed optimism that these reforms, if sustained, could lead the country towards a greener, more resilient, and inclusive development path.
Sri Lanka finds itself grappling with its most severe financial crisis since gaining independence from Britain in 1948, as the country’s foreign exchange reserves have reached record lows, resulting in its first-ever foreign debt default last year.
In March, the IMF granted a bailout package of nearly $3 billion, which Sri Lanka expects will attract additional funding of up to $4 billion from the World Bank, the Asian Development Bank, and other multilateral organizations.
To address its debt challenges with bondholders and bilateral creditors such as China, Japan, and India, Sri Lanka plans to unveil a domestic debt restructuring program this week, aimed at advancing the restructuring process and facilitating negotiations.
