Three private banks, which together deal with over 30% of Sri Lanka's remittances and exports, will receive the facility to fund essential imports, including medicine, food and fertiliser, the IFC said in a statement on Monday. The funds will provide a much needed foreign exchange cushion for Sri Lanka, which is grappling with its worst financial crisis in over seven decades partly triggered by a severe shortage of dollars.
The island nation's economy is estimated to have contracted by 9.2% in 2022 and is expected to shrink a further 4.2% in 2023, according to World Bank data. "We expect this financing to boost confidence in the investor community, attract fresh capital inflows to support the Sri Lankan economy," said Joon Young Park, IFC's Portfolio Manager, Financial Institutions Group for South Asia.
IFC is also working on further plans to support client banks with other long-term funding and advisory services in the future, the statement added.
Sri Lanka signed a preliminary agreement with the
International Monetary Fund (IMF) for a $2.9 billion bailout
last September but has to put its debt on a sustainable
repayment track before the funds can be disbursed.
(Reporting by Uditha Jayasinghe; Writing by Sakshi Dayal;
Editing by Sudipto Ganguly & Shri Navaratnam)
