Cabinet nod to downgrade SL to low income country

Cabinet has approved a proposal to downgrade Sri Lanka's status from a middle income country to a low income country. 

The decision to downgrade the country's status was made with the intention of obtaining concessionary loans, Cabinet Spokesman Minister Bandula Gunawardena told this morning's Cabinet media briefing. 

The Sunday Times exclusively reported that the cabinet will consider the proposal of seeking a “reverse graduation”, a downgrade of Sri Lanka into a low-income country on October 9, to borrow from the International bank of Reconstruction and Development (IBRD). 

International organizations providing aid to Sri Lanka find it arduous to provide aid to Sri Lanka as a middle-income as categorized by international standards, where the cabinet proposal was approved to obtain concessionary funding from the International Development Association (IDA). 

Mr. Gunawardena explained that in comparison to the $120 GDP per capita in 1948, the GDP per capita by 2004 had passed $1000, reaching $3827 by 2014, having graduated to a middle-income country by 2010. 

With the end of the LTTE war, Sri Lanka was able to utilize one-thirds of the coast and the land, leading to industrialization, which contributed to increase the GDP per capita, he further explained. 

By 2017, GDP per capita had risen to $4074, but decreased in the following years to $4057 in 2018, $3848 in 2019, $3695 in 2020 and $3815 in 2021, and is expected to decrease further with the 2022 Economic crisis.

However, the President's Media Division (PMD) this afternoon said that Sri Lanka will remain a middle income country. The government is pursuing a "reverse graduation" policy for a limited period of time," it further claimed.