The World Bank is likely to approve a $700 million aid package for Sri Lanka at its board meeting next week. This would be the largest fund injection for the crisis-hit country since an IMF deal in March.
Sri Lanka's economy is expected to contract 2% this year after shrinking 7.8% in 2021 due to depleted foreign reserves. An IMF bailout of nearly $3 billion in March is expected to unlock additional funding from multilateral agencies like the World Bank.
Of the proposed $700 million, $500 million would be for budget support in two tranches of $250 million. The first tranche is likely to be disbursed immediately after board approval, with the next in October. The remaining $200 million would assist the poor, whose numbers have doubled to 25% of the population since the economic crisis began.
"Households that have registered for support will be ranked ... and the lowest 2 million will be eligible for support," said a World Bank source.
The aid package aims to support Sri Lanka's economy during the IMF program and debt restructuring process. If approved, it would provide some relief as the country grapples with food and fuel shortages, inflation, and widespread protests.
