The Sri Lankan Cabinet of Ministers on Monday (10) will likely take up a proposal for Sri Lanka to revert from a middle-income country to a low-income country.
This is with the aim of obtaining concessionary funding from the International Development Association (IDA) — an arm of the World Bank that helps the world’s poorest and most vulnerable countries.
The decision has been taken after considering the financial constraints, including lack of foreign reserves, inflation, and difficulty in meeting debt payments.
The government also has taken into consideration the claim that some former officials had manipulated figures to push Sri Lanka to a middle-income country.
The move effectively means that Sri Lanka will be seeking a “reverse graduation’ to IDA on the grounds that the country lacks creditworthiness to borrow on market terms, including from the International Bank of Reconstruction and Development (IBRD)—the lending arm of the World Bank—and, therefore, requires concessional resources to finance the country’s development programs.
