Govt. signs for US $200Mn from WB, part of series initiated under RW Govt.

• The first operation, totaling $500Mn, was disbursed in June and December 2023 

The World Bank and the government signed the Second  Resilience, Stability, and Economic Turnaround (RESET) Development  Policy Operation (DPO) for $200 million, and this is the second  operation in a two-part series that began in 2022. The first operation,  totalling $500 million, was disbursed in June and December 2023. At that  time, former President Ranil Wickremesinghe was in office.    

The Second RESET DPO aims to support reforms that improve  economic governance, enhance growth and competitiveness, and protect the  poor and vulnerable, helping to build Sri Lanka’s resilience and  fostering an equitable economy.  

The operation focuses on improving economic governance to  create a stable macroeconomic environment and restore investor  confidence through key reforms. These include enacting a new Public Debt  Management Act to better inform borrowing decisions, implementing tax  administration reforms to boost revenues, and addressing financial  sector risks by tightening single borrower limits and improving  mechanisms for resolving non-performing loans. To improve living  standards and boost private sector development, the operation includes  amendments to the Telecommunications Act and a new Electricity Act to  improve services in these markets, as well as measures to enhance export  competitiveness by phasing out para-tariffs and lowering customs  duties.  

Central to the operation is the protection of the poor and  vulnerable. This will be achieved by revitalizing the social protection  system to help the poor and vulnerable cope with the lasting effects of  the economic crisis and price adjustments resulting from macro-fiscal  reforms. Enhancing women’s empowerment and reducing gender  discrimination to promote higher and more sustainable growth in Sri  Lanka is another key feature.  

“We are very proud of the excellent collaboration with the  authorities and their steadfast dedication to addressing the needs of  the Sri Lankan economy. This operation represents support for critical  reforms over the past two years, which were central to economic  stabilization,” said David Sislen, World Bank Regional Country Director for the Maldives, Nepal, and Sri Lanka. “Moving forward, Sri Lanka will now  have the opportunity to focus on maintaining its hard-earned stability  and investing in the private sector to transform the national growth  trajectory. Doing so is vital to boosting economic growth, creating  jobs, and ensuring that everyone benefits from a stronger, more  resilient economy.”