Bankrupt Sri Lanka: World Bank has offered lifeline to three big banks in bankrupt Sri Lanka. He has been given a $400 million loan to finance the import of essential food and medicines into the country, where the IMF bailout is stalled. Media reports suggested that amidst the widespread economic crisis in Sri Lanka, the International Finance Corporation (IFC), the private sector financing arm of the World Bank, is lending money to all three banks there.
The island country to the south of India is facing severe difficulties after Sri Lanka has run out of foreign exchange from the end of 2021 to finance essential food, fuel, medicines and fertiliser. In April 2022, this South Asian nation was surrounded by great difficulties when the loan stopped. Months of protests forced the president to resign in July, and the new government of Ranil Wickremesinghe sought $2.9 billion in relief from the IMF a month later.
Sri Lanka facing severe economic crisis
Restrictions imposed to save foreign exchange
Ratings agencies have said that Sri Lanka’s entire financial sector is facing a serious crisis, with loan defaults eroding the credibility of all local banks. At the same time, government restrictions are in place on non-essential imports to save foreign exchange in reserves.
Taxdoubled
President Wickremesinghe has doubled taxes and tripled fuel prices and utility charges in line with IMF demands to increase government revenue before the bailout. As a result they are facing widespread trade union opposition.
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