Sri Lanka receives first tranche of World Bank budget support

This was the biggest multilateral funding approved for Sri Lanka since the island nation struck a bailout deal with the IMF.

Sri Lanka has received $250 million as the first tranche out of a $500 million World Bank budgetary and welfare support, an official statement said on Tuesday, as part of the efforts to revive the bankrupt island nation's economy.

The World Bank last week announced that they approved $700 million in budgetary and welfare support to debt-ridden Sri Lanka, which is going through its worst economic crisis since independence from the British in 1948.

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“We are pleased to confirm that the first disbursement of $250 million out of $500 million for budget support from the World Bank has been received,” Shehan Semasinghe, the state minister of finance, said in a statement.

This was the biggest multilateral funding approved for Sri Lanka since the island nation struck a bailout deal with the International Monetary Fund (IMF) in mid-March.

The statement said that about $500 million of the funds will be allocated for budgetary support while the remaining $200 million will be for welfare support earmarked for those worst hit by the crisis.

"Through a phased approach, the World Bank Group strategy focuses on early economic stabilisation, structural reforms, and protection of the poor and vulnerable," the World Bank's country director for Sri Lanka, Faris Hadad-Zervos, said.

When the economic crisis kicked in April 2022, triggering widespread public protests, the World Bank's assistance allowed the island to end the cooking gas shortages.

Sri Lanka is facing its worst economic crisis in history due to a shortage of foreign exchange reserves. The country's economy has been hit hard by the pandemic, rising energy prices, populist tax cuts and double-digit inflation.

A shortage of medicines, fuel and other essentials also helped to push the cost of living to record highs, triggering nationwide protests which overthrew the government of President Gotabaya Rajapaksa in 2022.