World Bank Refuses to Offer New Finances to Crisis-Hit Sri Lanka Until Reforms Implemented

© AP Photo / Eranga JayawardenaA laborer pulls a cart load of imported rice at a wholesale market in Colombo, Sri Lanka, Sunday, June 26, 2022.
A laborer pulls a cart load of imported rice at a wholesale market in Colombo, Sri Lanka, Sunday, June 26, 2022. - Sputnik International, 1920, 29.07.2022
On June 27, Sri Lanka restricted fuel imports for a year as the newly appointed Ranil Wickremesinghe government cited a severe shortage of foreign exchange triggered by "financial mismanagement." Months-long protests ended last week with Gotabaya Rajapaksa fleeing to Singapore and resigning as president.
The World Bank does not plan to offer new financing to bankrupt Sri Lanka until the island nation of 22 million people has an adequate macroeconomic policy framework in place, the Washington-based lender said on Friday.
The US-led institution said the Indian Ocean island nation requires "deep structural reforms that focus on economic stabilization" and tackle the root causes of the crisis, which has forced millions to cut down on their calorie intake due to food shortages.

"To help alleviate severe shortages of essential items such as medicines, cooking gas, fertilizer, meals for school children and cash transfers for poor and vulnerable households, we are repurposing resources under existing loans in our portfolio," the bank said.

Nearly $160m in funds has been disbursed to meet the urgent needs of essential items, it added.
The refusal to provide relief at this juncture came a day after chief of the US Agency for International Development (USAID) Samantha Power blamed China's "opaque loan deals at higher interest rates than other lenders" for the current crisis in Sri Lanka.
Chinese Foreign Ministry spokesperson Zhao Lijian hit back at the US, saying the China-Sri Lanka practical cooperation has always followed the principle of being Sri Lanka-led.
"The US' wayward unilateral sanctions and tariff barriers have undermined the security of global supply and industrial chains, and worsened the price surge of energy, food and other bulk commodities," Lijian noted, stating that this has further aggravated the economic and financial condition of developing countries, including Sri Lanka.

The spokesperson further said the US should ask itself: "What has it done for the sustainable development of developing countries like Sri Lanka? What harm have US unilateral economic, financial, and foreign policies brought to other countries?"

Earlier this week, the United Nations assumed that more than 5.7 million people, including 2.3 million children, need immediate humanitarian assistance in Sri Lanka.
Sri Lanka owes $51 billion in debt, primarily to US-led multilateral institutions and venture funds. The Gotabaya Rajapaksa government, which resigned following unprecedented protests across the country for weeks, suspended repayment of its $51 billion in foreign loans for this year.
Ranil Wickremesinghe, who replaced Gotabaya by winning the support of the Mahinda Rajapaksa-led Sri Lanka Podujana Peramuna, has assured fellow citizens that ongoing bailout package negotiations with the International Monetary Fund (IMF) will be concluded in the next few weeks.
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