Debt-ridden Sri Lanka gets $350 million loan from Asian Development Bank

In a sigh of relief for the debt-struck island nation, the Asian Development Bank (ADB) approved a $350 million special loan to Sri Lanka on Monday. The loan is a special policy-based monetary assistance. It will provide a budget support to Sri Lanka for economic stabilisation, said ADB in its statement.

It is worth noting that the financial relief loan is a part of a broader package of financial assistance, announced by the International Monetary Extended Fund Facility for Sri Lanka. 

Sri Lanka is struggling to come out of its worst financial crisis since independence in 1948. It secured a $2.9 billion bailout from the IMF in March. To receive the sanctioned amount, the country needs to have a debt restructuring framework in place by September.

"ADB is concerned about the deep crisis in the country and its impact on the people of Sri Lanka, especially the poor and the vulnerable, particularly women," ADB President Masatsugu Asakawa said in the statement.

The Asian Development Bank is committed to standing with Sri Lanka as it addresses its present challenges and works toward economic stabilisation, sustainable recovery, and inclusive growth said the ADB President.

Sri Lanka owes around $7.1 billion to bilateral creditors, with $3 billion owed to China, $ 1.16 billion to India and $2.4 billion to the Paris Club, said ADB.

The government also requires to renegotiate more than $12 billion of debt in eurobonds with overseas private creditors, and $2.7 billion on other commercial loans. To come out of its economic adversities, which originated from COVID pandemic, blanket ban on fertilisers, and political turmoil, it would be important for Sri Lanka to remain steadfast in the the implementation of necessary reforms. 

(With inputs from Reuters)