Under new concession SL will be offered financing at low interest rates
Approval means SL is now an IDA country
SL will also receive technical assistance and policy advice by WB
Govt. welcomes reverse graduation
The World Bank this week approved Sri Lanka’s request to access concessional financing from the International Development Association (IDA).
According to the agency, this type of financing, which is offered at low interest rates, will enable the country to implement its government-led reform programme to stabilise the economy and protect the livelihood of millions of people facing poverty
and hunger.
The request is the result of Sri Lanka’s sustained deterioration in economic and social conditions, which have reduced income levels, reversed poverty gains and affected its access to financial markets. This approval means Sri Lanka now becomes an IDA country, the World Bank confirmed.
“We are committed to helping the Sri Lankan people at this time of dire need so their country turns around and restores its economic well-being,” said World Bank Vice President for Development Finance Akihiko Nishio in a statement to the media.
“The World Bank is ready to support Sri Lanka as it implements reforms that will reduce poverty and rebuild the economy, creating the foundation for sustainable growth,” he added.
Through the IDA support, the World Bank will provide concessional financing, technical assistance and policy advice as Sri Lanka implements reforms to drive recovery and enhance the country’s economic prospects, especially measures directed towards the poor.
Access to the IDA’s concessional financing would also alleviate the existing debt service pressures, given the more favourable terms the IDA financing carries. As an IDA country, Sri Lanka will also be subject to the IDA operational policies.
“At this time of critical need in Sri Lanka, we appreciate the World Bank’s rapid response and its vision as the first development partner to respond in record time through repurposing existing operations to help preserve Sri Lankan institutions for basic service delivery.
“The reverse graduation to the IDA will enable us to access resources to help sustain institutions to become more resilient and responsive to the needs of the people of Sri Lanka,” said Foreign Affairs Minister Ali Sabry.
Since 2017, when it first graduated from the IDA, Sri Lanka has been creditworthy for lending from the World Bank’s International Bank for Reconstruction and Development (IBRD). To date, in response to the country’s crisis, the World Bank has repurposed US $325 million from the IBRD and a further US $71 million from other regular World Bank operations towards crisis response for basic service needs. This has also helped leverage support from other multilateral development institutions, bilateral donors and UN agencies around a common crisis response mechanism.
Sri Lanka’s reverse-graduation brings the total number of the IDA countries to 75.
Daily Mirror