The World Bank Group said last week it is deeply concerned about the dire economic situation and its impact on the people of Sri Lanka.

To help alleviate severe shortages of essential items such as medicines, cooking gas, fertiliser, meals for school children and cash transfers for poor and vulnerable households, World Bank said it is repurposing resources under existing loans in its portfolio.

“To date, about $ 160 million of these funds has been disbursed to meet urgent needs. In addition, other ongoing projects continue to support basic services, the delivery of medicine and medical supplies, school meals and tuition waivers,” the World Bank said in a statement.

“The World Bank is working closely with implementing agencies to establish robust controls and fiduciary oversight to ensure these resources reach the poorest and most vulnerable while continuing to monitor this closely.

It is also coordinating closely with other development partners to maximise the impact of our support for the people of Sri Lanka,” it said.

World Bank also said until an adequate macroeconomic policy framework is in place, it does not plan to offer new financing to Sri Lanka.

“This requires deep structural reforms that focus on economic stabilisation, and also on addressing the root structural causes that created this crisis to ensure that Sri Lanka’s future recovery and development is resilient and inclusive,” the World Bank added.

The World Bank does not plan to offer new financing to Sri Lanka, which is battling its worst economic crisis in decades, until the Indian Ocean nation has an adequate macroeconomic policy framework in place, the lender said on Thursday.

In a statement, the World Bank said Sri Lanka needed to adopt structural reforms that focus on economic stabilisation and tackle the root causes of its crisis, which has starved it of foreign exchange and led to shortages of food, fuel and medicines.

“The World Bank Group is deeply concerned about the dire economic situation and its impact on the people of Sri Lanka,” it said.

The bank is repurposing resources under existing loans to help alleviate shortages of essential items such as medicine, cooking gas, fertiliser, meals for children and cash for vulnerable households, it added.

The bank said it was working closely to establish control and fiduciary oversight to ensure fair distribution.

Consumer confidence, already at extremely low levels, continued to drop with the public continuing to indicate they believe conditions will worsen in coming months and years.

The Institute for Health Policy (IHP) released yesterday the June 2022 update of its Consumer Confidence Indices, which are being tried as part of its Sri Lanka Opinion Tracker Survey (SLOTS).

All IHP’s Consumer Confidence measures declined throughout the month of June, falling to their lowest values since IHP started tracking them in September 2021, and in all cases very close to their lowest possible level.

The Index of Consumer Sentiment (ICS), which is the broadest measure reflecting the public’s views on their personal economic status and the broader national economy, fell four points from six in May to two in June, close to its lowest potential level of zero.

The Index of Consumer Expectation (ICE), which captures Sri Lankans’ views about the future, also fell from four points to one in June, indicating that sentiment is being driven by increasing lack of confidence in the future.

The Index of Consumer Conditions (ICC) a broad measure of perceptions about current conditions, also fell from six to four in June.

This worsening in sentiment is despite the resignation of the Prime Minister and Cabinet in early May but coincided with growing numbers of people turning out on the street and calls for the President to resign.

The deterioration in the economic situation with continuing power cuts, lack of fuel and transports, and worsening shortages of items undoubtedly contribute. Overall, the public remained deeply pessimistic about conditions and the future during June.

he current declining trend started in mid-February with the start of power cuts and increasing impact of foreign exchange shortages, plateau from mid-March, before consumer sentiment started to decline again from early April around the time of the resignation of the Cabinet.

Consumer pessimism is now universal, across all segments. Until February 2022, consumer confidence had been higher in the youth (ages 18–29 years) than older adults, largely because the youth continued to be significantly less pessimistic about the future (tracked by the ICE which looks at future expectations), but this future optimism of the youth has now collapsed, with consumer sentiment similar across all age groups.

The public appears resigned to the likelihood that economic conditions will worsen, with all three forward looking measures (household situation in next 12 months, country situation in next 12 months and in 5 years) now below 10, and worse than the measures tracking current and recent conditions.

With the measure tracking public views of the country’s situation in five years’ time at a new low of 3, more than 95% of Sri Lankans think the country’s economy will be in worse condition five years’ time than now.

The long-delayed Mannar basin M2 block (exploration and production) tender and commencement of exploration work by the selected bidder for the M1 and C1 July 2019 tender could cost Sri Lanka over a billion dollars in foreign direct investment (FDI).

Moreover, the delays conducting a marketing campaign to attract further investment while the oil and gas prices have been at historically high levels could be foregoing
billions more.

However Sri Lanka’s Power and Energy Minister Kanchana Wijesekera said that the government is ‘planning to advertise plots for studies on oil exploration in the Mannar Basin following research conducted in the area last year’.

The crisis-hit Sri Lankan government is planning to undertake a feasibility study on oil exploration in the Mannar Basin, a shallow bay part of the Laccadive Sea in the Indian Ocean, which has about 5 trillion cubic feet of natural gas, enough to meet the energy needs of the island nation for the next six decades, a media report has said.

A natural gas field was reportedly discovered for the first time here in 2011, but the country has not yet capitalised on this treasure trove, which could potentially solve Sri Lanka’s energy requirements, news portal Ada Derana has reported.

Minister Kanchana Wijesekera said that the government is “planning to advertise plots for studies on oil exploration in the Mannar Basin following research conducted in the area last year.”

According to the findings of the Committee on Public Accounts held in 2016, the Chief Accounting Officer said there were about 5 billion barrels of fuel and about 5 trillion cubic feet of natural gas in the Mannar Basin, which is enough to meet the needs of about 60 years, the report said.

Cairn India drilled three completed exploratory wells between 2011 and 2013. Two of the wells, Barracuda and Dorado, contain gas estimated to be 1.8 TCF and 300 BCF, respectively.

While they were not commercially viable when the oil and gas prices collapsed in 2014, there is a strong possibility they will be at today’s prices. There are technologies that have reduced capital expenditure such as gas-to-wire power generation that help make the economic case for production of these gas finds.


Cairn India has invested nearly US $ 200 million in Sri Lanka but it would require an investment of over US $ 1 billion to build production infrastructure.

Therefore, it is vital to urgently attract as many investors as possible for exploration and production to maximize the benefits to Sri Lanka – especially in light of the global energy crisis and concomitant energy price increases, which have enhanced investor appetite.

While one must drill to ascertain the actual existence and quantity of resources, seismic studies estimate nine TCF of gas and several billion barrels of oil in the Mannar basin.


This could fulfil several decades of the country’s energy needs while potentially saving US $ 6-7 billion p.a. in expenditure on energy. It also opens opportunities for Sri Lanka to earn revenue through production sharing agreements with investors, who take 100 percent of the risk.


The industry, which holds the potential to contribute crucial foreign exchange, both in terms of investment and possible future revenue from production, has largely been ignored or mismanaged in recent times.

It is imperative that Sri Lanka does not miss the small window of opportunity available with high prices and supply pressures, fast-disappearing internal combustion engines as well as the displacement of fossil fuels with the advent of ‘net zero’

Sri Lanka’s chicken meat production has collapsed 30 percent and egg output 40 percent as a currency collapse pushed up costs and feed imports were blocked by foreign exchange shortages, an industry official said.

“Small and medium farmers are leaving the business due to feed shortages and because big poultry companies are stopping buy back schemes,” Ajith Gunasekera, President of the All Island Poultry Association said.

Broiler meat output has fallen 30 percent to 12,000 metric tonnes a month from 18,000 metric and prices have shot up, he said.

A kilo of chicken is around 1,200 rupees from 460 rupee levels before economists started to print money to target an output gap by mis-targeting interest rates, and official inflation rose 39 percent in the year to May 2022.

Eggs which were around 18 to 25 rupees before the latest money printing bout have now shot up to 43 to 50 rupees.Egg production has collapsed 40 percent, amid feed shortages.

Gunasekera said daily egg production which was around 700,000 to 800,000 and now fallen to around 400,000.

“Chicken are also laying fewer legs due to nutrition problems,” Gunasekera said “A chicken will usually lay about one egg a day but without proper feed they will lay fewer eggs.”

Egg prices are up partly due to high transport costs from Kuliyapititya where most of the large egg farms are located to Colombo, he said.About 73 percent of the cost of raising broilers was feed.

Maize which was 40 to 45rupees a kilogram has now gone up to 80 to 90 rupees a kilogram but there was no supply with the domestic Maha season harvest having failed due to a fertilizer ban.Due to reduced paddy milling, rice polish is also not available.

Forex shortages from the non-credible peg has made it difficult to import maize or soya meal.The industry is hoping to get some inputs from the Indian credit line.

However he noted that poultry producers have to pay VAT, NBT and income tax excluding other duties and indirect taxes, in particular tax (CESS) on maize and other consumables, which are also substantial in amount and become a stumbling block under the present economic difficulties.

Several leading poultry production firms, which control an estimated 65 percent of the market, were forced to export their produce to maintain margins, he claimed.

He added that if the new administration takes prompt action to promote poultry exports, then the country’s dollar crisis could be tackled to a great extent.

All Island Poultry Association ( AIPA) Chairman Ajith Gunasekara disclosed that the industry has already invested heavily for poultry production and the government should provide more incentives for producers.

He complained that that was a shortage in animal feed, as domestic production of maize reduced and the Government imposed a ban on maize imports due to a policy to promote local production.

This has resulted in the poultry industry being unable to import the necessary maize to fill the shortage in domestic supply.