COLOMBO: Crisis-hit Sri Lanka will seek a downgrade of its credit status to try to access concessionary loans usually available only for the world’s poorest nations, the government said Tuesday.
With GDP per capita of $3,814 last year, Sri Lanka was considered a relatively prosperous nation of 22 million people until the government ran out of foreign exchange.
Despite suffering its worst-ever financial crisis, it is still considered a “lower middle income country”.
That makes it ineligible for concessionary loans from the World Bank’s International Development Association (IDA), which helps countries classed as “low income” – a status Sri Lanka moved up from in 1997.
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Government spokesman Bandula Gunawardena said the cabinet had approved seeking a “credit status downgrade” to a “gap” country to make it eligible for IDA assistance.
A top official at President Ranil Wickremesinghe’s office, Dinouk Colombage, described the move as a “reverse graduation” for a limited period.
The South Asian nation defaulted on its $51 billion external debt for the first time in April after suffering an unprecedented shortage of foreign exchange to pay for even the most essential imports.
The economic crisis has left Colombo unable to borrow commercially and seen international credit rating agencies downgrade Sri Lanka several times.
Months of protests over shortages of food, fuel and medicines led to the toppling of president Gotabaya Rajapaksa in July.
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