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Sri Lanka clinches USD 300m annual loan from IDA
View(s):By Bandula Sirimanna
Sri Lanka secured a USD 300 million annual commitment from the World Bank’s International Development Association (IDA) following a meeting of its deputies in Washington on Thursday, the Sunday Times reliably learns.
As a member of the World Bank, the IDA is the financial institution that offers concessional loans to developing countries.
At Thursday’s meeting, the IDA reviewed Sri Lanka’s request for a temporary downgrade to lower-income-country (LIC) status from a middle-income-country (MIC) status.
The request was for a reverse classification to allow IDA concessional financing as, after the default in April, Sri Lanka was not credit-worthy for loans from the World Bank’s IBRD (International Bank for Reconstruction and Development). Sri Lanka was eligible for USD 500 million annually from the IBRD until the default.
In Colombo, a World Bank spokesman said a decision is yet to be reached for the IDA loan, but confirmed Sri Lanka requested a shift from IBRD status (MIC) to IDA Gap status (LIC).
The spokesman said: “The discussions were positive and the World Bank management will communicate its decision to the Government once completed. Amounts under IDA will be determined at that point and communicated. The World Bank’s actual financing support is subject to a deep reform agenda and an IMF programme,” he told the Sunday Times.
Sources in Colombo said the IDA-IBRD financial facility was in the pipeline in the Finance Ministry’s foreign fund mobilisation programme and will, however, remain with middle-income country status.
Sri Lanka in its proposal to the IDA indicated its readiness to develop climate-resilient growth strategies and relevant projects with special attention to gender issues, women, children, and the elderly who are most affected by the economic downturn, senior Finance Ministry officials said.
The Public Sector Efficiency Project and the Country Readiness for Public-Private Partnerships (PPP) are the two projects proposed to be implemented by the Ministry of Finance with financial and technical support from the World Bank. The Social Safety Nets Project is an ongoing project with World Bank assistance.
According to the public debt portfolio published by the Treasury this week, Sri Lanka’s total public debt was USD 79.9 billion, including arrears as of end June, in which foreign and local currency stock of government debt, guaranteed State-Owned Enterprises and debt of Central Bank amounts to USD 70.1 billion, USD 6.6 billion and USD 3.2 billion respectively.
The country’s total government debt is 127.2 percent of the nation’s Gross Domestic Product (GDP).
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