Aid funding flows in after debt-restructuring success
View(s):By Duruthu Edirimuni Chandrasekera
Foreign donor aid is gaining momentum for Sri Lanka on the verge of its sovereign bond restructuring, top officials said.
They noted that, now multilateral agencies are returning and are resuming infrastructure projects.
The news of the OPEC Fund for Development providing US$100 million, in financing for irrigation and water security in Sri Lanka is a positive development for the country. This funding will support a project linked to the Mahaweli River, which is crucial for agriculture and water management in the country.
The fact that the Asian Development Bank is already supporting this project with a $300 million credit further demonstrates the importance of the initiative and the recognition it has received from international financial institutions, the officials pointed out.
“The country has been facing economic challenges, including a high level of external debt, and securing new financing from reputable international organisations like the OPEC Fund is a positive sign that the government’s efforts to address its financial issues are yielding results,” an official said.
In principle, aid agencies cannot give aid if a country’s rating is at Default, a banker noted, saying that if Sri Lanka gets into the CCC Stage there may be some movement in aid flows into the country.
An economist noted that most cash comes through multilateral and bilateral agencies in the state sector, but the real growth is in the private sector. “If the country gets into the Triple C status, we can see some recovery through assistance to the private sector by agencies. Also buffering the reserves from the $5 billion to $8 to $10 billion will continue to push up the ratings in the country,” he said.
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