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’