The World Bank (WB) has released the second tranche of the United States dollars ($) 500 million (Mn) under the Sri Lanka Resilience, Stability, and Economic Turnaround (RESET) Development Policy Operation (DPO), considering the continued satisfactory progress made by the Government with the reform programme.
The RESET DPO, which provides budget support to the Government, was approved on 28 June this year. This is the first in a series that supports foundational reforms to restore macroeconomic stability, mitigate the impacts on the poor and the vulnerable, and support an inclusive, private sector-led recovery.
The World Bank says that this support is contingent on prior actions or milestones that need to be completed before the funding is released.
In a statement, the global financial institution said that the second tranche is now being released after assessing that the Government continues to make satisfactory progress in carrying out the broader reform programme, and since the macroeconomic policy framework remains adequate, and the Banking (Special Provisions) Act – aimed at strengthening the deposit insurance and problem bank resolution framework – has been enacted.
“Continued momentum on economic and structural reforms is critical not only to stabilise the economy, but also to unleash its potential for private sector-led growth and transformation,” said World Bank Country Director for Sri Lanka Faris H. Hadad-Zervos.
“The RESET DPO supports the Government with these foundational reforms to bring the economy to full recovery, boost Sri Lanka’s competitiveness and growth potential, and encourage private sector investment and participation for inclusive and resilient growth and job creation. We have coordinated and sequenced all our support with the International Monetary Fund, the Asian Development Bank, and other development partners,” Hadad-Zervos added.
The first tranche of the RESET DPO for $ 250 million was released in June upon the completion of seven prior reform actions across three pillars: economic governance, growth and competitiveness, and protecting the poor and the vulnerable.