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World Bank lending to Sri Lanka set to double

The World Bank will lend more than twice as much to Sri Lanka over the next 12 months from July, reports Bloomberg.

Sri Lanka will receive $500 million during that period. Bloomberg reports that currently, Sri Lanka borrows $200 million annually under concessionary terms.

Earlier this year, the former deputy governor of Sri Lanka's Central Bank, W. A. Wijewardena, warned that the economy was heading for trouble despite an official predicted growth forecast of 7.2%. The AFP news agency wrote at the time,

"Sri Lankan economist and former central bank deputy governor W. A. Wijewardena believes the economy is in trouble despite an official 7.2 percent growth forecast for 2012.

He says the balance of payments problem will have a knock-on effect on Sri Lanka's ability to service its large commercially raised foreign debt, the value of the local currency and domestic prices.

The country needs to borrow heavily to finance the trade deficit and repay debt which could push the country into a vicious debt cycle, experts warn."

See AFP report here.

Also see Sri Lanka’s emerging economic crisis  (18 March 2012)

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