Crisis-hit Sri Lanka has decided to seek an additional $500 million in short-term loans from India as the island country grapples with the shortage of essentials, including fuel, while the World Bank has said it will not provide any new funding to Colombo before it puts into place a sound microeconomic policy.

For months now, the country has been witnessing its worst economic crisis, with people across the country queuing up for hours to get basic things like food, fuel, and medicines. The unprecedented public anger following the crisis resulted in the ouster of the earlier government headed by the country’s strongman Mahinda Rajapaksa.

The new cabinet headed by Prime Minister Ranil Wickremesinghe granted approval for the proposal submitted by the Minister of Electricity and Energy to obtain a series of short-term loan facilities worth another $500 million with the assistance of the export-import bank of the Indian government in order to purchase petroleum products required by the country settling the foreign exchange shortage existing at the moment, the government said in a statement.

The crisis also impacted the country’s health sector, resulting in a shortage of medicines in several hospitals. The World Bank has been extending much-needed assistance to support the sector.

However, the World Bank, on Tuesday, issued a statement, saying, “Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka.”

Significantly, the government had earlier used the part of the World Bank funding, intended for the medical imports, in the import of fuel.

“We are currently repurposing resources from previously approved projects to help the government with some essential medicines, temporary cash transfers for poor and vulnerable households, school meals for children of vulnerable families, and support for farmers and small businesses,” the World Bank added in its statement.

(SAM)