CB confirms SL looking to lower lending category to gain access to concessional funding

26 October 2022 07:12 am - 11 - {{hitsCtrl.values.hits}}

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By Shabiya ali Ahlam

The Central Bank yesterday confirmed that the government is embarking on the process towards reverse

Dr. Nandalal Weerasinghe
Pic by Kithsiri de Mel

graduation so that the forex-starved country has improved and wider access to concessional loans.
However, Sri Lanka will not be looking to downgrade its position in terms of its income status, but instead will be looking to ‘reverse graduate’ in its lending category, and discussions are underway with the World Bank (WB) for the same.

A downgrade in income status is not possible as it is determined by the WB based on the per capita income, which should be below US$ 1,045 to be demoted to the lower middle-income category.

Sri Lanka has been listed under the lower middle-income category since July 2020, after being downgraded from the upper-middle income status it received a year ago.

Responding to a query at the launch of the State of the Economy 2022 report, at which the Central Bank Governor Dr. Nandalal Weerasinghe was a keynote speaker, he said the move is necessary for Sri Lanka in the current scenario.

“The World Bank is certainly willing to help us once we get the IMF support. But, the limitation is that they can’t increase concessions in IBRD (International Bank for Reconstruction and Development) access. So the way to enhance access to concessions is through reverse graduation,” said. Dr. Weerasinghe. “Once we restore debt sustainability, we will have access to a mix of concessions. We (Sri Lanka) will not be reclassified (as a lower income nation). We will still be a middle-income country,” he added.

Sri Lanka currently falls in the IBRD lending category, after it was upgraded to the middle-income level.
Until 2017, Sri Lanka was classified under International Development Association (IDA), through which Sri Lanka had access to concessional funding. The IDA is a member of the WB group and offers loans and grants to the world’s poorest developing countries. An IDA graduation policy paper by the WB highlighted that reverse graduation is typically experienced by countries that have poor macro-economic management combined with volatile international commodity prices, over-borrowing on non-concessional terms in boom years, and a downturn in the global economy.

While graduation is a sign of success, the WB in its previously published policy papers have cautioned that reverse graduation would adversely affect the reputations of the countries and their governments and is disruptive for planning purposes.

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Comments - 11

Athk69 Wednesday, 26 October 2022 05:46 AM

Reverse graduation? Falling too little too short. What is before the lowest category? That maybe a more suitable placement for Sri Lanka.

Punchi Wednesday, 26 October 2022 08:11 AM

I read somewhere that DS Senanayake once told GG Ponambalam that Tamils cannot have rights only concessions approved by the majority. Now 74 years later as a country we are looking for anything concessionary - Loans’s, fuel etc. Also we have given territorial concessions like Hambantota port and its environs to overseas countries. The East India Company started out with trading post and went on to rule almost the entire sub continent

Jude Wednesday, 26 October 2022 09:03 AM

Hey Nandalal, you should move back to downunder!! Yeah!!

Nihal Amarasekera Wednesday, 26 October 2022 09:42 AM

Reverse gazette era to Reverse graduation

Allen Selwyn Wednesday, 26 October 2022 11:23 AM

We are financially bankrupt and now intellectually bankrupt. Going backwards is all we do. 74 years of going backwards.

Junior Wednesday, 26 October 2022 03:12 PM

Sir your puss magic is basically what any one could have done. Increase tax, interest rates and reduce or restriction on imports. But fortunately for you the country was already in begger state that the politicians also had no choice for any jilmart but to agree for all these changes. The entire nation is suffering and most are leaving or trying to leave desperately. Ppl living here are struggling to what to do next. U can make policies for the pancies and donkeys left and ride on them.

Todd Wednesday, 26 October 2022 03:27 PM

After reading most of the comments here, I realized that the figures in the recently released survey report by the CB was actually correct. It showed that 58% of Lankan adults are financially illiterate.

Down the prices Wednesday, 26 October 2022 05:05 PM

Look forward to either a wealthy individual, or group bring court case against Nandalal Weerasinghe for the decisions he makes that are ruining the financial situations of our citizens.

Daily Mirror Humbug useless to give name Wednesday, 26 October 2022 05:07 PM

Reading the comments, looks most of them are dumb donkeys of Sri Lankans who are financially illiterate even to understand the depth of foreign exchange assets need of hour to do international trading. Cheers to all guys, you may enjoy and be in the long queues for petrol, gas in the future, and let the agricultural sector die again never to be reborn due to lack of foreign currency to buy fertilizer etc .

Daily Mirror Humbug useles to give name Wednesday, 26 October 2022 05:17 PM

Hi Junior, Please do migrate after been a lotus eaters with every thing free here. Then only you would realize , that Australia, Canada, USA , England etc the greener pastures have taxes to pay over 30-35 % from your purse . In addition Mortgage with fixed and variable interests to pay. Hurry up !!!!

Shelly Belly Thursday, 27 October 2022 12:27 AM

Trying to find the answer going backwards, under and over and around. First start with the 225 parliament. It is too big for such a small country. Too big because of the inefficiency of the ministers they need to have a deputy minister, his secretary the deputy secretary and secretary's assistant etc. Stop the overseas trips like the Disney talks in USA and other needless foreign trips where MPs take unnecessarily large groups with them on their travels.

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CB confirms SL looking to lower lending category to gain access to concessional funding

Comments - 11

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