COLOMBO (NewsRadio); The Cabinet of Ministers has granted approval to a proposal to reclassify Sri Lanka as a low-income country from an upper middle-income country.
The approval has been granted during yesterday’s weekly Cabinet meeting.
Speaking during the Cabinet media briefing at the Department of Government Information this morning, Cabinet Spokesperson Minister Bandula Gunawardena confirmed that the Cabinet approved the proposal for authorities to seek from the World Bank to reclassify Sri Lanka as a low-income country.
Minister Gunawardena said the downgrade is a reflection of the economic status of the country.
The Minister said income levels have dwindled in the last few years although Sri Lanka was elevated as an upper middle-income nation in 2017.
Sri Lanka’s status as an upper middle-income country has prevented the government from accessing World Bank’s cheapest loans from the International Development Association.
Accordingly, a decision has been taken to seek from international organizations for a downgrade of the economic status.
The World Bank provides additional concessionary funding to the world’s poorest and most vulnerable countries while Sri Lanka cannot access such funds since it has been classified as a middle-income nation.
Minister Bandula Gunawardena said the reclassification is done by international bodies and therefore yesterday’s approval was only the initial step in the process.
Meanwhile, according to the latest World Bank report, Sri Lanka’s real GDP is expected to fall by 9.2 percent in 2022 and a further 4.2 percent in 2023.
The incumbent government has been taking a number steps in recent weeks to address the balance of payment and the economic crises.
President Ranil Wickremesinghe during his recent visits to Japan and the Philippines also held talks to obtain additional funding from international bodies and friendly nations as well as attracting new investments.
The government is currently in the process of taking steps to secure a bailout package from the International Monetary Fund as well.
