World Bank Denies Offering Fresh Funds To Sri Lanka Until Macroeconomic Policies In Place

The World Bank said it cannot give new loans to Sri Lanka until a proper economic plan is in place though it is re-directing money from un-disbursed loans for immediate humanitarian needs of the poor, the sick and school children.

It said that recent media reports had inaccurately stated that the World Bank planned to provide Sri Lanka with a new bridge loan or other loan commitments.

Sri Lanka is suffering the worst currency crisis in the history of its 72 year-old intermediate regime central bank with rupee collapsing from 200 to 380 to the US dollar and inflation soaring to around 30 percent by April.

According to reports, Sri Lanka is on the verge of bankruptcy, and essentials such as food, gasoline, medicines, and cooking gas,  are in limited supply. Besides, people have been forced to wait in long queues to purchase the limited stocks. Meanwhile, Sri Lanka  has also put off repaying approximately USD 7 billion in foreign loans due this year, out of a total of USD 25 billion due by 2026. The country owes a total of USD 51 billion in foreign debt.

“We are concerned for the people of Sri Lanka and are working in coordination with the IMF and other development partners in advising on appropriate policies to restore economic stability and broad-based growth,” the World Bank said

“Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka.”

The World Bank is only re-purposing already approved loans, the agency said saying reports about a new ‘bridge financing’ is not correct.

The International Monetary Fund has said Sri Lanka’s debt is unsustainable and has to be restructured and a new fiscal and monetary program is being developed.

Full statement:

“Recent media reports have inaccurately stated that the World Bank is planning support for Sri Lanka in the form of a bridge loan or new loan commitments, among other incorrect assertions.

We are concerned for the people of Sri Lanka and are working in coordination with the IMF and other development partners in advising on appropriate policies to restore economic stability and broad-based growth.

Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka.

We are currently repurposing resources from previously approved projects to help the government with some essential medicines, temporary cash transfers for poor and vulnerable households, school meals for children of vulnerable families, and support for farmers and small businesses.”