Sri Lanka will move from receiving funding from the World Bank’s International Bank for Reconstruction and Development (IBRD) to concessional loans from the International Development Association (IDA). State Minister of Finance Shehan Semasinghe discussed this when he met the World Bank Vice President for the South Asia Region, Martin Raiser, and a World Bank delegation, during the World Bank Annual Meetings 2022.
The discussions were focused on the current creditworthiness of Sri Lanka, which is no longer entitled to source funding through the World Bank’s International Bank for Reconstruction and Development (IBRD). Instead Sri Lanka has to work with the International Development Association (IDA) rating, which will grant Sri Lanka to obtain concessional loans. This process, which will entail a “reverse graduation” to IDA, will move Sri Lanka from an IBRD-only country to an IDA country. However, Sri Lanka will remain listed as a middle-income country.
The IMF/WB also emphasized that access to this potential new concessional funding remains linked to deep reforms, an IMF programme, and progress with a comprehensive debt treatment process by the authorities of Sri Lanka. The VP and the WB Delegation said that sustained improvements in economic and social conditions, by the Sri Lankan government, could pave the way for Sri Lanka to graduate from IDA in the future.