The World Bank has released a second tranche of $250 million to support economic reforms in Sri Lanka, the bank said in a statement today .
The International Monetary Fund earlier this month cleared the first review of Sri Lanka’s $2.9 billion bailout, providing about $337 million in funds to help tackle the fallout from the country’s worst financial crisis in decades.
The second tranche of the USD 500 million under the Sri Lanka Resilience, Stability and Economic Turnaround (RESET) Development Policy Operation (DPO) was released considering the continued satisfactory progress made by the government with the reform program.
The RESET DPO, which provides budget support to the government, was approved on June 28, 2023. This is the first in a series that supports foundational reforms to restore macroeconomic stability, mitigate the impacts on the poor and vulnerable, and support an inclusive, private sector-led recovery.
The World Bank says this support is contingent on prior actions or milestones that need to be completed before the funding is released.
In a statement, the global financial institution said the second tranche is now being released after assessing that the government continues to make satisfactory progress in carrying out the broader reform program, the macroeconomic policy framework remains adequate, and the Banking (Special Provisions) Act – aimed at strengthening the deposit insurance and problem bank resolution framework – has been enacted.
“Continued momentum on economic and structural reforms is critical not only to stabilize the economy, but also to unleash its potential for private sector-led growth and transformation,” said Faris H. Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka.
“The RESET DPO supports the government with these foundational reforms to bring the economy to full recovery, boost Sri Lanka’s competitiveness and growth potential, and encourage private sector investment and participation for inclusive and resilient growth and job creation. We have coordinated and sequenced all our support with the IMF, ADB, and other development partners,” Mr. Hadad-Zervos added.
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