The Government of Sri Lanka is planning to borrow USD 500 million from the International Development Association (IDA) of the World Bank Group in 2023 to finance the implementation of Sri Lanka First Programmatic Resilience, Stability and Economic Turnaround (RESET), Development Policy Operation (DPO) Program.
The DPO is a two-year program from 2023-2024. USD 500 million will be provided under this program in two equal tranches to support the Government of Sri Lanka’s foundational reform plan. This plan aims to restore stability through macroeconomic adjustments in the short run, help the poor and vulnerable cope with the current shock, and address structural causes of the current economic crisis to help restart growth. The DPO’s first tranche of USD 250 million will be available for disbursement upon the effectiveness of the operation after World Bank Board approval on 28th June 2023. The second tranche will be available in October 2023 subject to the enactment of the Banking (Special Provisions) Act, acceptable progress in carrying out the program, and continued adequacy of the macroeconomic policy framework.
The DPO program seeks to address some of the root causes of the economic crisis and introduce measures to avoid a repetition of such a crisis through three pillars: (i) improving economic governance to strengthen fiscal discipline, transparency, and accountability of fiscal and public resource management and safeguard financial stability; (ii) enhancing growth and competitiveness to unlock Sri Lanka’s growth potential through a more vibrant and competitive private sector; and (iii) protecting the poor and vulnerable from the fallout of the crisis.
The relevant Loan Agreement for the Sri Lanka Resilience, Stability and Economic Turnaround (RESET), Development Policy Operation (DPO), amounting to USD 500 million was signed by Mr. A.K. Seneviratne, Deputy Secretary to the Treasury, and Mr. Faris H.Hadad-Zervos, Country Director, on 29th June 2023 on behalf of the Government of Sri Lanka and IDA, respectively.