As negotiations with the International Monetary Fund (IMF) continue, Sri Lanka’s finance minister, Ali Sabry, announced that the country would receive $300 to $600 million from the World Bank over the next four months to buy medicine and other essential goods.
In a video conference, the minister announced that discussions with the IMF would take time and that the World Bank would assist in addressing immediate needs. A spokesperson for the World Bank told reporters that the institution would leverage existing bank-financed projects and repurpose funds to quickly provide medicines, meals for school children and cash transfers for poor and vulnerable households. Included in this response package will be $10 million for the immediate purchase of essential medicines.
Sri Lanka’s finance minister further declared that the country would seek assistance from China, Japan, and the Asian Development Bank for help. It comes as India has provided $ 2.4 billion since the start of the year to Sri Lanka through a currency swap, loan deferment, and credit lines for food, fuel, and medicines. Indian officials have also urged the IMF to aid Sri Lanka.
A statement from the IMF reads:
“The discussions covered recent economic and financial developments in Sri Lanka, the need for implementing a credible and coherent strategy to restore macroeconomic stability, and the importance of stronger social safety nets to mitigate the adverse impact of the current economic crisis on the poor and vulnerable”.
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Critics of the IMF have raised concerns that negotiations will lead to harsh austerity and privatisation which will place the burden of the economic crisis on women. Sri Lanka will be expected to pay off $7bn of its total $25bn in foreign debt this year.
The IMF statement further welcomed Sri Lanka’s plans to “engage in a collaborative dialogue with their creditors”.
On Friday, Sabry told reporters that discussions with the IMF focused on a more traditional Extended Fund Facility program, but that $3 billion to $4 billion in bridge financing was needed while this could be finalized.