October 12, 2022
2 mins read

SL urges WB loans for poorer nations

The government has stated that Sri Lanka will remain a middle-income country. However Sri Lanka no longer qualifies for International Bank for Reconstruction and Development (IBRD) loans due to a downgrade of its credit rating…reports Susitha Fernando

Sri Lanka is to urge the World Bank to grant it concessionary funding given to poorer nations while remaining a middle-income country.

The island nation would seek the eligibility for International Development Association (IDA) loans while remaining as a middle-income country, the President’s Office announced on Tuesday. Cabinet approval has been obtained to make the request from the World Bank, it said.

“This is with the aim of obtaining concessionary funding from the IDA – an arm of the World Bank that helps the world’s vulnerable countries. This facility is called ‘Gap’,” President Ranil Wickremesinghe’s Office said in a statement.

“Twelve countries including Indonesia have availed themselves of this facility when they were facing economic downturn similar to Sri Lanka. The government is pursuing a ‘reverse graduation’ policy for a limited period of time,” it stated.

The government has stated that Sri Lanka will remain a middle-income country. However Sri Lanka no longer qualifies for International Bank for Reconstruction and Development (IBRD) loans due to a downgrade of its credit rating.

Earlier on Tuesday, Cabinet Minister and spokesman Bandula Gunawardena told media that Sri Lanka has decided to downgrade itself from status of middle-income country to a low- income country. This was with the aim of attracting more foreign concessionary funding from the IDA.

Sri Lanka was forced to downgrade itself due to financial constraints, dried-up foreign reserves, skyrocketing inflation and difficulty in debt repayment. Faced with the worst-ever financial crisis in the history, in May this year, the Indian Ocean island nation defaulted its external debt repayment. Decided by the Central Bank, the country suspended repayments of its international loans around $7 billion which is out of total foreign debt more than $51billion due for the year 2022.

Sri Lanka, which was elevated to the upper middle-income category was downgraded to a developing or emerging lower-middle-income economy in 2020, the year following the Easter Sunday attacks, a deadly blow on country’s tourism industry, one of the main foreign currency generator. The ISIS-led disaster was followed by the Covid 19 pandemic which crippled the country’s textile industry and foreign income earned by the migrant workers.

ALSO READ: India to train 1,500 Sri Lankan army personnel

Previous Story

UN alarmed over sentencing of minors in HK

Next Story

Congress counters PM’s claim that J&K issue not resolved by Nehru

Latest from -Top News

‘Kill and Dump’ Haunts Balochistan Again

The latest killings have reignited accusations of extrajudicial executions and the use of counterterrorism laws to cover up custodial deaths in Balochistan….reports Asian Lite News Concerns have deepened across Balochistan following the

‘ASEAN Expands, But Keeps Its Soul’

Malaysian Foreign Minister Mohamad Hasan urged ASEAN to uphold its unity and strategic resolve amid intensifying geopolitical tensions and mounting external pressures…reports Asian Lite News Consensus and inclusivity will remain the cornerstones

Bangladesh bends to beat Trump’s blow

Dhaka seeks compromise as Trump’s 35% tariff looms large over key exports; Washington urges worker protections, factory relocation to US…reports Asian Lite News Bangladesh has opened the second round of critical trade

China seethes as US lands F-35s in PH

As US F-35 jets land in the Philippines for the first time, Manila cements its frontline role in Washington’s power play against rising China….reports Asian Lite News The Philippines is rapidly cementing
Go toTop

Don't Miss

India extends aid worth $3.9 bn to help Lanka

India’s EXIM bank and State bank of India, for the

Lanka’s ruling coalition loses majority

Tuesday’s development comes amid an ongoing turmoil in the island