COLOMBO: Sri Lanka said on Monday it had secured a new $200 million World Bank loan to bolster economic recovery, the first foreign funding since leftist President Anura Kumara Dissanayake won elections.

Dissanayake, a self-avowed Marxist, took power last month on the back of public anger over the island’s 2022 economic meltdown, promising to reverse steep tax hikes, raise public servant salaries and renegotiate an unpopular $2.9 billion International Monetary Fund (IMF) bailout.

The loan announced on Monday, which follows an earlier $500 million World Bank loan after the 2022 economic crash, would help in “fostering an equitable economy”, the bank said in a statement. Dissanayake said the loan would support “economic reforms for stability, growth, and protection of the vulnerable”.

The new president approved last week a controversial restructuring of $14.7 billion in foreign commercial credit tentatively agreed by his predecessor Ranil Wickremesinghe. Wickremesinghe announced a deal with international sovereign bondholders and the China Development Bank two days before he lost September presidential elections.

Dissanayake had called for better terms but, after talks with an IMF delegation in Colombo, his government said it would honor the deal. Sri Lanka defaulted on its external debt for the first time in 2022 after running out of foreign exchange during its worst financial crisis.

Months of street protests against acute shortages of essentials led to the toppling of then leader Gotabaya Rajapaksa. Dissanayake, a member of a once-marginal leftist party, was elected on the back of public resentment over perceived corruption and mismanagement. He called snap parliamentary elections for November 14 days after he was sworn into office. Any deal with bondholders or the IMF will require approval by the next parliament. – AFP