COLOMBO: On Friday, the World Bank announced that it would not provide Sri Lanka with new funds unless the island nation implemented “deep structural reforms” to stabilize its collapsing economy. With its 22 million residents experiencing months of food and fuel shortages, rolling blackouts, and escalating prices, Sri Lanka has experienced a historic collapse.
Large-scale protests earlier this month compelled the country’s former president, Gotabaya Rajapaksa, to leave and resign after the South Asian country went into default on its $51 billion foreign debt in April. The World Bank stated that while it was worried about how the crisis was affecting Sri Lankans, it was not yet prepared to provide funding until the required reforms had been implemented by the government.
The World Bank said it had already diverted $160 million from existing loans to finance urgently required medicines, cooking gas, and school meals. This calls for significant structural changes that prioritize economic stabilization as well as addressing the underlying factors that contributed to the crisis.
The International Monetary Fund and Sri Lanka are now in bailout negotiations, although authorities warn that it might take months. The island nation lacks the foreign currency to pay for even the most basic goods, and ongoing shortages have stoked public resentment.