As Sri Lanka faces a major economic crisis, Vice President for the World Bank’s South Asian division, Hartwig Schafer concludes his six-day visit of the island pledging support “to invest in people to power the country towards a green, resilient and inclusive recovery”.
During his visit, he met with the war crimes accused President Mahinda Rajapaksa, Prime Minister Mahinda Rajapaksa, Finance Minister Basil Rajapaksa, and other senior cabinet ministers. Schafer also met with former Prime Minister, Ranil Wickremesinghe, and opposition leader, Sajith Premadasa. He did not meet with leaders of the major Tamil pollical parties.
Sri Lanka’s embrace of the World Bank follows comes as Sri Lanka faces a major financial crisis with average monthly food prices rising 63% in the past month. Earlier this year a Bloomberg model reported that Sri Lanka’s default probability was the highest in Asia with the organisation estimating a 27.9% chance of one-year default. Sri Lanka owes at least $2.5 billion in debt over the next 12 months.
Earlier this year, both Sri Lanka’s Finance Minister and the Central Bank Governor, Weligamage Don Lakshman, expressed scepticism overturning to institutions such as the International Monetary Fund over concerns that it would infringe upon the country’s sovereignty. Instead, the country has increasingly turned to countries such as China and Bangladesh for financial assistance.
Schafer’s visit was marked by a signed $500 million financing agreement to support agricultural supply chains and to build on ongoing provincial and rural roads rehabilitation. The World Bank notes that in Sri Lanka’s rural community, agriculture is the main livelihood source and is “heavily dependent on roads to connect farmers to resources and domestic and international markets”.
“While nearly all national roads are paved, only 67 per cent of provincial roads, and 13 per cent of rural roads are in good condition. Sri Lanka also has the highest rate of road fatalities in the South Asia Region with around 3,000 deaths per year” they add.
Today I wrap up my six-day visit to #SriLanka and I take away some deep insights and understanding of Sri Lanka’s development constraints and opportunities. The @WorldBank remains a steadfast partner in Sri Lanka's development journey. pic.twitter.com/E3n9c5rqYr
— Hartwig Schafer (@HartwigSchafer) November 9, 2021
The United Kingdom has also pledged to support Sri Lanka through deepening trade and investment but has faced stern criticism in parliament. Tamil activists have accused the UK of attempting to launder Sri Lanka’s image with rhetoric on environmental stewardship instead of demanding accountability and justice.
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