The World Bank has agreed to provide US$600 million in financial assistance to the country amid the economic crisis, President’s Media Division (PMD) revealed in a statement on Tuesday (April 26) .
“World Bank Permanent Representative Chiyo Kanda during a meeting with President today (26) informed that World Bank has agreed to provide US $ 600 million financial assistance to Sri Lanka to overcome the current economic crisis, of which US $ 400 million will be provided promptly under the 1st phase,” PMD said in a statement.
As the country struggling to tackle high levels of debt and trim the fiscal deficit to mitigate the adverse impacts on citizens, World Bank recently warned that more Sri Lankans will slip into poverty this year.
The unprecedented economic crisis in Sri Lanka is caused in part by a lack of foreign currency. It means the country cannot afford to pay for imports of the staple, such as food and fuel.
The situation led to acute shortages and very high prices, leaving the economy in tatters with people protesting across the country. Sri Lanka has nearly $7 billion in foreign debt due for repayment this year and will need to repay $25 billion over the next five years.
“Around 11.7 per cent of people in Sri Lanka earn less than USD 3.20 per day, the international poverty line for lower-middle income countries, up from 9.2 per cent in 2019,” the Bank said in its Spring Update on the South Asian region.
Meanwhile, a senior International Monetary Fund (IMF) official on Tuesday (April 26) suggested that Sri Lanka must tighten monetary policy, raise taxes and adopt flexible exchange rates to address its debt crisis. The country of 22 million people has requested loans from the IMF.
The strategic Indian Ocean Island’s pathetic plight featured on major media and television channels that craft the global narrative, with images of people in queues amid food, fuel, and medicine shortages due to its crashing currency, soaring cost of living and ‘Arab Spring’ style protests.
One of the wealthier nations in the South Asia region and listed by the World Bank in 2019 as an Upper Middle-Income County (MIC), Sri Lanka with a population of 22 million people had just defaulted on her debt payments—for the first time in the country’s history.
Global media imaging of the scenic island nation’s financial crisis served to affirm the relevance of the Washington Consensus and the Fund albeit as the “lender of last resorts”.
Sri Lanka’s total debt is USD 51 billion and the country must pay USD 7 billion this year to International Sovereign Bond (ISB) traders based in New York as noted by Senior Economist and Head of the Institute for Policy Studies (IPS), Dr Dushni Weerakoon.