Colombo, Sri Lanka
Reuters

The World Bank has agreed to provide Sri Lanka with $US600 million in financial assistance to help meet payment requirements for essential imports, the Sri Lankan president's media division said in a statement on Tuesday.

"The World Bank has agreed to provide $US600 million in financial assistance to address the current economic crisis," the statement said.

The World Bank would release $US400 million "shortly", it said.

Indonesia World Bank logo

A participant stands near a logo of World Bank at the International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, on 12th October, 2018. PICTURE: Reuters/Johannes P Christo/File photo.

According to the statement, the World Bank said it would continue to help Sri Lanka to overcome the current economic crisis.

Sri Lanka's worst financial crisis since independence in 1948 was caused by a drastic drop in its reserves that dropped 70 per cent over the past two years, hitting $US1.93 billion at the end of March. This left Colombo struggling to pay for essentials, including fuel, medicines and food.

Earlier this month, Sri Lanka kicked off talks with the International Monetary Fund for financial assistance. Before the IMF finalises a program for Sri Lanka, the country needs $US3 to $US4 billion in bridge financing to help meet its essential expenses.



The Sri Lankan Government has also appealed to multiple countries and multilateral organisations for bridge financing until the IMF comes up with its aid.

India has helped Sri Lanka by assisting with $US1.9 billion, and Colombo is in talks with New Delhi for an extra $US1.5 billion to fund imports, including fuel.

Sri Lanka is also negotiating with China for up to $US1 billion in a syndicated loan.

Sri Lanka's Finance Minister Ali Sabry said Colombo would also seek assistance from the Asian Development Bank.

The country announced a suspension on some of its foreign debt repayments earlier this month and said it would divert its meagre reserves to fund essential imports such as fuel, cooking gas and medicine.