Sri Lanka will get $300 million to $600 million from the World Bank over the next four months to purchase medicine and other necessities, according to the country’s finance minister, as the Indian Ocean island faces its worst economic crisis in decades.
Finance Minister Ali Sabri, who is in Washington to negotiate a bailout with the International Monetary Fund, said in a video conference that talks with the IMF may take some time, but that the World Bank has agreed to help in the meanwhile.
Sri Lankan economy spirals deeper into perilous times
Sri Lanka is on the verge of default, with roughly $7 billion of the country’s total $25 billion in foreign debt due to be repaid this year. Due to a serious dearth of foreign exchange, the country is unable to purchase imported commodities.
Food, cooking gas, petrol, and medicine have all been in short supply for months, with Sri Lankans queuing for hours to buy the minimal supplies available.
In recent months, fuel prices have risen numerous times, resulting in significant rises in transportation costs and other commodities prices. Another set of increases was announced earlier this week.
The administration has stated that repayment of foreign loans will be suspended pending the outcome of talks with the IMF.
Protests and public shootings ensue
On the 14th day, protesters occupied the president’s office entrance, demanding that President Gotabaya Rajapaksa and his powerful ruling family resign for the economic catastrophe. The protests have spread across the country, with people blocking roads with their vehicles.
One person was killed and 13 others were injured on Tuesday when police opened fire on a crowd protesting the fuel price hike, the first death since the protests began.
The shooting has sparked widespread outrage, and the administration has promised to launch an independent investigation.
Much of the animosity thrown at Rajapaksa and his elder brother, Prime Minister Mahinda Rajapaksa, has been focused at them, as they lead an influential dynasty that has been in power for most of the previous two decades. Five additional members of the family are legislators, three of whom just resigned as Cabinet ministers.
Sri Lanka calls on its neighbours for assistance
According to Sabri, the administration is also seeking assistance from China, Japan, and the Asian Development Bank.
China has already committed $31 million in emergency assistance, which includes 5,000 tonnes of rice, medicine, and raw supplies. It had previously stated that it was considering a request for $2.5 billion in economic assistance, which would include a credit line and a loan.
Part of the debt crisis can be attributed to projects that were financed with Chinese loans but did not turn a profit.
India has also agreed to pay $500 million for gasoline purchases, and talks are underway for an extra $1 billion with New Delhi, which has previously offered a $1 billion credit line, according to Sabri.