With an aim to get concessionary funds from the World Bank’s International Development Association (IDA), Sri Lanka’s Cabinet agreed to downgrade its economic status from middle to low income.
The IDA is a financial institution that grants funds and loans to poor and vulnerable countries across the globe.
“Representatives of international organizations had informed us that if Sri Lanka was categorized as a low-income country, access to funding would be easier,” the country’s Cabinet spokesman Bandula Gunawardane said.
The country is battling its worst financial crisis since gaining independence. In 2022, for the first time, Sri Lanka failed to pay on its to foreign debts, which amount to around $4 billion due this year.
The government is also in talks with creditors on restructuring its more than $51 billion total foreign debt, in which Japan, China, and India are its biggest providers.
Meanwhile, the country’s Finance Minister Asanka Shehan Semasinghe is in Washington to seek funds for the cash-strapped country.
In August, consumer inflation in Sri Lanka topped 70 percent, mostly driven by high food and fuel prices.