The World Bank has disbursed the second tranche of the US$500 million Sri Lanka Resilience, Stability, and Economic Turnaround (RESET) Development Policy Operation (DPO), citing the government’s ongoing satisfactory progress in implementing the reform program.
Approved on June 28, 2023, the RESET DPO provides budget support to the government and represents the initial step in a series aimed at underpinning foundational reforms. These reforms are designed to restore macroeconomic stability, alleviate the impact on the poor and vulnerable, and foster an inclusive, private-sector-led recovery. The disbursement is contingent upon the completion of specific prior actions or milestones. The second tranche has now been released following an assessment confirming the government’s continued satisfactory progress in the broader reform program. The evaluation also affirmed the adequacy of the macroeconomic policy framework and the enactment of the Banking (Special Provisions) Act, focused on strengthening the deposit insurance and problem bank resolution framework.
Faris H. Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka, emphasized the critical importance of sustained momentum in economic and structural reforms. He stated, “Continued momentum on economic and structural reforms is critical not only to stabilize the economy but also to unleash its potential for private sector-led growth and transformation.” Hadad-Zervos highlighted the RESET DPO’s role in supporting foundational reforms that contribute to the full recovery of the economy, enhance Sri Lanka’s competitiveness and growth potential, and stimulate private sector investment for inclusive and resilient growth and job creation. Coordination with other international partners, including the IMF, ADB, and other development entities, has been emphasized to ensure cohesive support for Sri Lanka’s economic recovery.
The first tranche of the RESET DPO, amounting to US$250 million, was disbursed in June 2023 upon the completion of seven reform prior actions spanning economic governance, growth and competitiveness, and the protection of the poor and vulnerable.
