Tuesday, January 31, 2023

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Foreign donor agencies agree on coordinated aid program for Sri Lanka

World Bank (WB), Asian Development Bank (ADB), International Monetary Fund (IMF) and Asian Infrastructure Investment Bank (AIIB) representatives decided that a coordinated assistance program supported by the multilateral financial institutions is required for Sri Lanka to recover from the economic crisis the country is currently facing.

They reached the agreement following a lengthy round table discussion held yesterday (06) with President Ranil Wickremesinghe in Colombo where the latter presented Sri Lanka’s development program associated with the economic recovery and growth along with the vision for long term development.

The President presented the program at the round table discussion in his capacity as the Minister of Finance, Economic Stabilization and National Policies.

The round table discussion was held with Vice President of the World Bank Mr. Martin Raiser, Vice President of the Asian Development Bank Mr.Shixin Chen, IMF’s Senior Mission Chief Mr.Peter Breuer and Dr.Urjit Patel of the Asian Infrastructure Investment Bank along with the senior officials of those institutions, who are currently in Sri Lanka.

Following the detailed discussion, it was agreed that a coordinated assistance program supported by the multilateral financial institutions is vital for Sri Lanka to recover from the present economic difficulties.

In the interim, the government is expected to set the contours of Sri Lanka’s economic reform programme—tax hikes, spending cuts, and rationalizing state-owned enterprises—to reassure international creditors that the country is on an adjustment path.

Sri Lanka’s economic crisis is deepening with unsustainable debt and a severe balance of payment crisis on top of lingering scars of the COVID-19 pandemic.

Debt restructuring and the implementation of a deep reform program are critical for Sri Lanka’s economic stabilization,SL development program highlighted. .

Plunged into its worst-ever economic crisis, Sri Lanka’s real GDP is expected to fall by 9.2 percent this year and a further 4.2 percent in 2023.

High commodity prices also worsened Pakistan’s external imbalances, bringing down its reserves. After devastating climate-change-fueled floods submerged one-third of the country this year, its outlook remains subject to significant uncertainty.

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