World Bank Approves $1 Billion Loan to Boost Sri Lanka’s Economy

The World Bank has approved a $1.0 billion loan to help revitalise Sri Lanka’s agriculture, tourism, and energy sectors, as the country continues its recovery from the devastating 2022 economic collapse.

The announcement came after a meeting in Colombo between World Bank President Ajay Banga and Sri Lankan President Anura Kumara Dissanayake. The loan will be disbursed over the next three years to strengthen local industries and attract private investment.

“With progress underway to stabilise the economy and restart growth, core elements for job creation are in place,” Banga stated.

This comes after Sri Lanka secured a $2.9 billion IMF bailout last year under then-President Ranil Wickremesinghe, helping the country restructure debt following a $46 billion sovereign default.

Despite signs of recovery, the World Bank cautioned that poverty remains widespread. Still, Sri Lanka’s economy grew 5.0% in 2024, surpassing initial forecasts of 4.4%—its first economic expansion since the crisis.

However, the country’s recovery could be threatened by the possible reinstatement of a 44% US tariff, currently on a 90-day pause. The United States remains Sri Lanka’s top export market, responsible for nearly a quarter of its $12 billion in goods exports.

Ajay Banga added, “Now is the time to accelerate reforms and create the conditions for private enterprise to thrive—especially in sectors that can create jobs at scale.”