World Bank agrees to provide $600 million in financial assistance to Sri Lanka

World Bank agrees to provide $600 million in financial assistance to Sri Lanka

The unprecedented economic crisis in Sri Lanka is caused in part by a lack of foreign currency.

Office of Sri Lankan President Gotabaya Rajapaksa revealed in a statement on Tuesday (April 26) that the World Bank has agreed to provide $600 million in financial assistance to the country amid the economic crisis.

"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. As reported by news agency PTI, 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.

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"We've had very good, fruitful, technical discussions on preparations for the negotiations with authorities over the past weekend and couple of days before," said Anne-Marie Gulde-Wolf, acting director of the IMF's Asia and Pacific Department, speaking at an online news conference.

"The requirement for fund lending will be progress toward debt sustainability," Gulde-Wolf said.

On April 24, thousands of university students in Colombo attempted to march to a protest site opposite the office of Rajapaksa, but they were blocked by police barricades.

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