Sri Lanka’s eligibility for IDA concessionary loans comes under scrutiny
Sri Lanka’s latest attempt of seeking assistance from international financial agencies offering concessionary loan facilities normally given to low income countries while maintaining its status of a lower middle income earning country has raised issues relating to eligibility.
The aim is to obtain the funding from international financial agencies such as the international Development Association (IDA) that help the world’s poorest countries, the President’s Media Division (PMD) announced this week
IDA, an arm of the World Bank, offers concessionary loan facilities but the question is as to how Sri Lanka is going to prove its suitability for such facilities with relevant economic data, several leading economists said.
Despite the country’s current worst-ever financial crisis, it is still considered a ‘lower middle income country’ which is not eligible for concessionary loans from the IDA, Finance Ministry sources said adding that Sri Lanka status had been moved up from 1997.
The symptoms of the onset of the economic crisis in 2013 were visible from many fronts though they were ignored by the government policy makers at that time.
Since then there was a worsening external sector, unusual growth in money and credit, suppressed inflation, slow-down of economic growth and an undisciplined budget causing the accumulation of public debt, an economic analyst said.
However Sri Lanka’s dodgy economic statistics have often been questioned by the IMF and the World Bank. At least one officer of the Census and Statistics department was sacked in 2013 for alleging that GDP numbers were boosted on political advice.
Without commenting on the current request, the World Bank office in Colombo said it would continue its discussions with Sri Lanka and that the “key priority” was to move ahead with debt restructuring and economic reforms to put the country’s growth back on track.
Sri Lanka’s GDP per capita was $3,814 last year and it was considered a relatively well-off nation of 22 million people till the government’s declaration of preemptive debt default in April this year, Finance Ministry records showed.
Its GDP per capita is expected to reach $4300 by the end of 2022, according to Finance Ministry macro models and analysts’ expectations.
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