WB upgrades Sri Lanka

Eligible for IBRD funding, encourages stronger partnership for development, emphasises need for inclusive growth and winning peace

By Uditha Jayasinghe  

Sri Lanka has been upgraded by the World Bank (WB) to be eligible for International Bank for Reconstruction and Development (IBRD) — funding from the non-concessional window — that is expected to increase the country’s resources for development.

This is viewed as recognition for Sri Lanka’s achievement of middle income status and extension of a stronger partnership with the WB. However Sri Lanka will continue to obtain International Development Association (IDA) from the WB, according to WB Managing Director Dr. Ngozi Okonjo-Iweala who delivered the special anniversary oration titled “Becoming the Wonder of Asia : Accelerating Inclusive Growth in Sri Lanka” as part of Central Bank’s diamond jubilee celebrations.

“A middle income country partnership with the WB requires more resources.

 The IDA allocation has been running at below US$ 200 million annually and while I think that amount served the relationship well in the past, the time is right to increase the lending envelope to an amount that better reflects the new development ambitions of the government,” she said adding that the bank’s recent credit worthy assessment has concluded Sri Lanka eligible for IBRD.

Insisting that the WB is more than a funding source Dr. Okonjo-Iweala remarked that Sri Lanka would do well to share knowledge with the organisation as well as use it as a facilitator to gain information from other emerging economies. A few other points were also highlighted by her as needing attention.

“Sri Lanka has what it takes to be the Wonder of Asia and decisively tackle issues of poverty reduction and economic growth acceleration. To get there it is important to raise investments and improve the productivity of those investments through innovation policies. Skills development, macroeconomic stability and implementing policies that promote inclusive growth are also important. Sri Lanka must deepen connections to global markets as this would be key to meet the needs highlighted above. In this Sri Lanka needs to be fast, flexible and agile to be able to exploit ever growing opportunities in a fast changing world,” she said.

WB Managing Director also focused on the importance of winning the peace by forging strong partnerships and nurturing a sense of ownership by all Sri Lankans in the growth process. She insisted that inclusive development is essential as history has proved that it is the parties that get left behind that attempt to unhinge the economic process and arguments over how the pie is divided rather than how it must grow.

She welcomed policies by the government to open private universities in Sri Lanka and emphasised that all East Asian success stories became a reality as a result of international expertise transferring into countries and that Sri Lanka will have to assimilate knowledge fast to become globally competitive. “Universities will have to forge partnerships with companies to ensure that what they are teaching is relevant in the job market and long term investment in education is a must if Sri Lanka wishes to double its per capita income in six years.”

World Bank MD calls on President

Surpassing the USD 2000 per capita income, Sri Lanka is no longer an underdeveloped country and as a result not qualified for International Development Association (IDA) loans that provide interest free financial assistance to underdeveloped countries, Dr. Ngozi Okonjo-Iweala, Managing Director of the World Bank Group stated.

She made this statement when she called on President Mahinda Rajapaksa at Temple Trees yesterday.

Government sources said the World Bank will consider providing a commercial loan of USD 265 million from the International Bank for Reconstruction and Development.

The International Bank for Reconstruction and Development (IBRD), an arm of the World Bank aims to reduce poverty in middle-income and creditworthy countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services.

‘The World Bank has been an active partner in supporting Sri Lanka in its transition from a low income country in conflict to a middle income country in peace’, said Dr. Okonjo-Iweala.

The post-conflict environment provides an opportunity to build on our relationship to support the government’s vision to firmly establish the country’s place in the ranks of fast growing middle income countries, she said.

In addition to funding, she said the World Bank is willing to share knowledge and expertise with Sri Lanka regarding urban development.

Foreign Direct Investment is vital for any middle income country to achieve its economic targets, she added.

She also emphasised the importance of seeking alternative energy sources as the world is on the brink of an energy crisis.

Deputy Minister of External Affairs Geethanjana Gunawardena, Secretary to the President Lalith Weeratunga and Governor of the Central Bank Ajith Nivard Cabraal were also present at the discussion.

‘Dr. Ngozi Okonjo-Iweala’s trip coincides with a new era of development in Sri Lanka as it embarks on an ambitious new course towards a middle income country in lasting peace,’ the World Bank said in a recent statement.

Dr. Okonjo-Iweala, a national of Nigeria, was formerly the Minister of Foreign Affairs as well as the first female Minister of Finance and Economy for Nigeria.