Photo by Ketut Subiyanto
Colombo, Sri Lanka – In a significant boost to Sri Lanka’s post-crisis economic recovery efforts, the World Bank on Wednesday announced a $1 billion support package aimed at generating employment and accelerating private sector development over the next three years. The funding commitment follows a high-level meeting between World Bank President Ajay Banga and Sri Lankan President Anura Kumara Dissanayake.
The package, detailed in a press release issued by the World Bank, is designed to broaden economic opportunities across the island nation, stimulate domestic industry, and attract sustained private sector investment. The initiative comes at a crucial time as Sri Lanka emerges from its most severe economic downturn since gaining independence in 1948.
“The World Bank’s support will help foster a more vibrant private sector capable of creating sustainable employment opportunities, particularly for the country’s youth,” the statement said. It also noted that approximately one million young Sri Lankans are expected to enter the labor force over the next decade. However, current projections indicate that only around 300,000 new jobs will be created within the same time frame—highlighting a critical gap that the new initiative seeks to address.
The three-year support package is expected to mobilize more than $800 million in private investment. As part of the initiative, the World Bank will also provide $40 million in investment guarantees, aimed at reducing the risk for investors and encouraging increased private sector participation in key industries.
According to a statement from President Dissanayake’s office, discussions with World Bank President Banga also focused on boosting digital infrastructure, expanding tourism, revitalizing the agriculture sector, and advancing infrastructure development—particularly in the historically underserved Northern and Eastern provinces. These regions, which bore the brunt of Sri Lanka’s decades-long civil conflict, remain a key focus in the government’s inclusive development strategy.
The announcement from the World Bank follows closely on the heels of progress in Sri Lanka’s ongoing financial stabilization efforts. On April 25, the International Monetary Fund (IMF) and the Sri Lankan government reached a staff-level agreement on the fourth review of the country’s $2.9 billion Extended Fund Facility (EFF) programme. Approved in March 2023, the EFF is intended to assist Sri Lanka in recovering from the devastating economic crisis marked by depleted foreign reserves, soaring inflation, and nationwide shortages of essential goods.
In a statement issued last month, the IMF praised Sri Lanka’s continued commitment to reform under the EFF programme, noting improvements in fiscal discipline, monetary policy, and governance.
The combined backing of the World Bank and IMF marks a turning point in Sri Lanka’s efforts to stabilize its economy and build the foundation for long-term growth. As the government shifts its focus from crisis management to sustainable development, support from global financial institutions is expected to play a pivotal role in shaping the island’s economic future.
