The World Bank said on Friday that it will not give any new loans to Sri Lanka. The Washington-based global lender said the loan would not be granted unless debt-ridden Sri Lanka took major economic reform measures to stabilize its collapsing economy. News from AFP.
Sri Lanka in the face of unprecedented recession. The country’s 22 million people have been living with food and fuel shortages for months, hours without electricity, and rampant inflation.
This led to protests in the island nation. Sri Lanka’s president resigned earlier this month after fleeing the country amid protests.
Sri Lanka’s foreign debt now stands at US$52 billion. Last April, Sri Lanka announced that they will not be able to repay the debt for the time being.
Through this, the country officially declared itself bankrupt for the first time after independence. After that, the government of the country started to get new loans.
The Sri Lankan government approached the World Bank like other international lending institutions. However, the World Bank said it is concerned about the ongoing crisis in Sri Lanka.
But if the country’s government does not take effective steps to bring about the reforms that are now needed to break the deadlock of the economy, they will not be given loans.
The World Bank does not plan to extend new financing to Sri Lanka until an appropriate macroeconomic policy framework is in place, the agency said.
This requires deep structural reforms. Reforms should be brought in thinking of dealing with the main structural issues responsible for economic stability and economic crisis.
Meanwhile, the Sri Lankan government is in talks with another lender, the International Monetary Fund (IMF), for a bailout (economic restructuring).
But the process of getting loan from IMF is long. Getting a loan can take months or even years. However, the discussion between the two sides has started again since yesterday Friday.🔱