Dec 06, Colombo: The World Bank Monday has approved Sri Lanka’s request to access concessional financing from the International Development Association (IDA).

The World Bank said in a statement that this type of financing, which is offered at low interest rates, will enable the country to implement its government-led reform program to stabilize the economy and protect the livelihood of millions of people facing poverty and hunger.

The request is the result of Sri Lanka’s sustained deterioration in economic and social conditions, which have reduced income levels, reversed poverty gains, and affected its access to financial markets. This approval means Sri Lanka now becomes an IDA country.

“We are committed to helping the Sri Lankan people at this time of dire need so their country turns around and restores its economic well-being,” said Akihiko Nishio, World Bank Vice President for Development Finance. “The World Bank is ready to support Sri Lanka as it implements reforms that will reduce poverty and rebuild the economy, creating the foundation for sustainable growth.”

Through IDA support, the World Bank will provide concessional financing, technical assistance, and policy advice as Sri Lanka implements reforms to drive recovery and enhance the country’s economic prospects, especially measures directed towards the poor.

Access to IDA’s concessional financing would also alleviate existing debt service pressures given the more favorable terms IDA financing carries. As an IDA country, Sri Lanka will also be subject to IDA operational policies.

“At this time of critical need in Sri Lanka, we appreciate the World Bank’s rapid 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,” said Ali Sabry, Hon. Minister of Foreign Affairs of Sri Lanka. “The reverse graduation to IDA will enable us to access resources to help sustain institutions to become more resilient and responsive to the needs of the people of Sri Lanka.”

Since 2017, when it first graduated from IDA, Sri Lanka has been creditworthy for lending from the World Bank’s International Bank for Reconstruction and Development (IBRD).

To date, in response to the country crisis, the Bank has repurposed $325 million from IBRD and a further $71 million from other regular Bank operations towards crisis response for basic service needs. This has also helped leverage support from other multilateral development institutions, bilateral donors, and UN agencies around a common crisis response mechanism.

Sri Lanka’s reverse-graduation brings the total number of IDA countries to 75.