Home Business $400 Million Loan from World Bank to Bail Out Bankrupt Country

$400 Million Loan from World Bank to Bail Out Bankrupt Country

The World Bank has provided a lifeline to three banks private in Sri Lanka which defaulted on Monday, lending them $400 million to finance the import of basic foodstuffs and medicines in light of the halting of an International Monetary Fund bailout package.

The World Bank’s International Finance Corporation will provide the loan to the three banks in one moment in which Sri Lanka is still mired in its economic crisis.

The South Asian country of 22 million people has been in dire straits since it ran out of foreign currency to finance the import of staples like food, fuel, medicine and fertilizer in late 2021. It has defaulted on its debts in April 2022, according to AFP.

Months of protests forced the president to step down in July, and Ranil Wickremesinghe’s government asked for a $2.9 billion bailout package from the International Monetary Fund a month later.

But authorities say the package has not been released due to the inability of China, Sri Lanka’s main bilateral creditor, to provide financial guarantees.

The International Finance Corporation said the deal reached in credit loan with Ceylon Commercial Bank, Nations Trust Bank and Sampath Bank will support the private sector through core financing that contributes to the country’s urgent need to stabilize the economy.

Rating agencies have indicated that Sri Lanka’s entire financial sector is under severe pressure after sovereign debt default undermines confidence in all local banks.

Remains in enforce a government ban on non-essential imports in an effort to save foreign exchange.

Wickremesinghe doubled taxes and tripled fuel prices and utility rates, in line with requests from the International Monetary Fund, to boost government revenue ahead of any bailout package. As a result, it faces widespread protests led by trade unions.


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