The World Bank plans to disburse $700 million to crisis-stricken Sri Lanka by reallocating its existing loans, a move that will help the island nation grapple with a much-needed unprecedented economic crisis until a bailout with the IMF is being worked out, media reported on Monday.
Sri Lanka is on the verge of bankruptcy and suffers from severe shortages of basic commodities such as food, fuel, medicine and cooking gas.
For months citizens were forced to stand in long queues to buy the limited supplies.
World Bank Country Director Chiyo Kanda met with the Sri Lankan Foreign Minister last week and assured him that the agency would work with the Asian Development Bank (ADB), the Asian Investment Bank in infrastructure (AIIB) and the United Nations office to redirect their projects already underway. , reported the Colombo Gazette news portal.
Minister Peiris has requested assistance from the World Bank until long-term assistance materializes through the IMF, other international institutions and donor countries, the report says, citing a ministry statement Sri Lankan Foreign Affairs.
Therefore, Kanda assured Peiris that the global lender would disburse $700 million to Sri Lanka during these difficult times in the coming months, according to the report.
Discussions at the technical level with Sri Lanka have started. They will continue in order to prepare the political discussions once a new government has been formed, the IMF said, quoted by the report.
During our virtual mission from May 9 to 23, discussions at the technical level have just started and have continued as planned in order to be fully prepared for political discussions once a new government is formed, the IMF said. in a press release.
The IMF also said it was following developments in Sri Lanka closely and was concerned about rising social tensions and violence.
In April, the two sides convened their first round of talks at IMF headquarters in Washington.
Sri Lanka is hoping for a Rapid Financing Facility (RFI) as well as an Extended Financing Facility (EFF) from the international financial body to help it deal with its foreign exchange shortages, which have triggered an economic crisis.
At the last meeting, the IMF assured to help the country with an amount of 300 to 600 million dollars.
On April 12, Sri Lanka suspended debt service for the first time in its history.
The island nation is facing its worst economic crisis since gaining independence from Britain in 1948.
The economic crisis has also sparked political unrest with a protest occupying the entrance to the president’s office demanding his resignation which has been going on for more than 50 days.
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