Cabinet nod for US$ 200mn World Bank loan to strengthen social safety net

The Cabinet greenlight has been granted to enter into a loan agreement with the World Bank (WB) to secure US$ 200 million loan for the proposed social security project, which includes funding for ‘Aswesuma’ welfare benefit scheme.
President Ranil Wickremesinghe in his capacity as the Minister of Finance, Economic Stabilisation and National Policies this week sought the approval of the Cabinet of Ministers to enter into the relevant agreement with the International Development Association (IDA) of the World Bank Group in order to secure the loan.

The World Bank has agreed to provide US$ 200 million loan for three components, which include US$185 million for assisting the ‘Aswesuma’ welfare scheme, US$ 7 million to pilot economic inclusion approaches for the most vulnerable among a selected number of beneficiaries and US$ 8 million for strengthening the entire project management and social security system under the project.
In May this year, the Cabinet approved the proposal to hold discussions and negotiations with the World Bank for the implementation of a project to provide a better target income and livelihood opportunities to poor and vulnerable groups and to strengthen the social security system.

The World Bank is expected to make the first disbursement of US$ 100 million next year followed by US$ 56 million, US$ 36 million, US$ 7 million and US$ 1 million disbursements in 2025, 2026, 2027 and 2028.
According to the World Bank, the percentage of the population living in extreme poverty (international poverty rate) in Sri Lanka is estimated to have risen to 5.8 percent in 2022 from 1.5 percent in 2021 and further rise to 6.6 percent this year. 

The share of the population living in lower middle-income poverty rate (US$ 3.65 in 2017 PPP) more than doubled to 25 percent in 2022 from 13.1 percent in 2021. In addition, a record 65 percent of the population has been estimated to live below upper middle-income poverty line (US$ 6.85 in 2017 PPP) up from 51.1 percent in 2021.