Sri Lanka’s request to use International Development Association concessional funding was accepted by the World Bank yesterday (IDA).
The country will be able to undertake its government-led reform program thanks to this low-interest funding, which will help protect the livelihoods of millions of people who are struggling with poverty and hunger and stabilize the economy.
The request is a result of Sri Lanka’s persistently deteriorating social and economic circumstances, which have lowered income levels, reversed progress against poverty, and hampered its access to financial markets. With this approval, Sri Lanka is now an IDA member.
Akihiko Nishio, vice president for development finance at the World Bank, stated, “We are dedicated to aiding the Sri Lankan people at this time of great need so that their country turns around and restores its economic well-being.” As Sri Lanka pursues reforms to lessen poverty and restore the economy, laying the groundwork for sustainable growth, the World Bank is prepared to assist.
With IDA’s assistance, the World Bank will offer concessional funding, technical support, and policy recommendations as Sri Lanka implements reforms to boost the nation’s economic prospects, particularly those aimed at the poor.
Given the more advantageous conditions IDA financing bears, having access to its concessional financing would also help to relieve current debt servicing strains. Sri Lanka will be bound by IDA operational guidelines as an IDA member.
Ali Sabry, Sri Lanka’s minister of foreign affairs, said, “At this time of dire need in Sri Lanka, we appreciate the World Bank’s prompt response and its vision as the first development partner to respond in record time through repurposing existing operations to help preserve Sri Lankan institutions for basic service delivery.” “The reverse graduation to IDA will allow us to access resources to support institutions so they may become more resilient and responsive to the demands of the people of Sri Lanka,” says the author.
Sri Lanka has been creditworthy for loans from the International Bank for Reconstruction and Development since 2017, when it first graduated from IDA (IBRD). To date, the Bank has diverted $325 million from the IBRD and an additional $71 million from other regular Bank activities towards crisis response for essential service requirements. As a result, an unified crisis response framework has been able to attract funding from other multilateral development institutions, bilateral donors, and UN agencies.
With Sri Lanka’s reverse graduation, there are now 75 IDA nations in total.
