World Bank approves $150m aid to bolster Sri Lanka’s financial sector

The World Bank has approved a $150 million aid package to strengthen Sri Lanka’s financial sector, following a severe economic crisis that began in 2022. The announcement was made by Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka on Thursday.

The funds are intended to enhance the Sri Lanka Deposit Insurance Scheme (SLDIS), which is managed by the Central Bank of Sri Lanka. The SLDIS currently covers more than 90% of deposit accounts in the country. This move aims at safeguarding smaller depositors and assisting failed finance companies. Today, the World Bank Executive Board ratified this grant, underscoring its pivotal role in fostering economic stability.

The approval of the aid package comes as Sri Lanka awaits the second tranche of the International Monetary Fund’s bailout package. On October 31, global money lending agencies stressed the need for rapid external debt restructuring due to Sri Lanka’s foreign debt of USD 46.9 billion. They emphasized that confidence in the financial system is crucial for recovery.

Today, Faris Hadad-Zervos reiterated that these measures are designed to uphold trust in Sri Lanka’s financial system and protect smaller depositors.

In addition to these efforts, on November 3, President Ranil Wickremesinghe, who also serves as the Minister of Finance, announced that servicing external credit with interest would be a primary focus of the upcoming 2024 budget presentation in Parliament on November 13.

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