World Bank refuses new funding for bankrupt Sri Lanka
Colombo, Sri Lanka - The World Bank said Friday it would not offer new funding to Sri Lanka unless the bankrupt island nation carried out "deep structural reforms" to stabilise its crashing economy.
Sri Lanka has suffered an unprecedented downturn with its 22mn people enduring months of food and fuel shortages, rolling blackouts and rampant inflation.
The South Asian nation defaulted on its US$51bn foreign debt in April and huge protests earlier this month forced then president Gotabaya Rajapaksa to flee the country and resign.
The World Bank said it was concerned about the impact of the crisis on Sri Lanka's people but was not ready to give funds until the government had bedded down necessary reforms.
"Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka," the lender said in a statement. "This requires deep structural reforms that focus on economic stabilisation, and also on addressing the root structural causes that created this crisis."
The World Bank said it had already diverted US$160mn from existing loans to finance urgently needed medicines, cooking gas and school meals.
Sri Lanka is currently in bailout talks with the International Monetary Fund but officials say the process could take months.
The island nation has run out of foreign exchange to finance even the most essential imports, and chronic shortages have inflamed public anger.
Motorists stay in long queues for days to get rationed petrol and government officials have been told to work from home to reduce commuting and save fue.