Sri Lanka clarifies remaining 'middle-income' country, but still seeks concessional loans

Sri Lanka will remain a middle-income country but request the World Bank to grant it some loans generally offered to poorer nations, the president's office said on Tuesday, clarifying a cabinet spokesperson's earlier comments on the matter.

The island nation of 22 million is facing its worst economic crisis in more than seven decades and the spokesperson said earlier in the day that the government would seek to change its economic status to "low-income country" for easier funding.

President Ranil Wickremesinghe's office, however, said the status change would not happen.

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"Sri Lanka will remain a middle-income country," the office said in a statement. "We will request the World Bank to grant the country eligibility to obtain loans offered by the International Development Association (IDA)."

The IDA is a division of the World Bank that offers grants and loans with zero or low-interest rates to the world's poorest nations in an effort to combat poverty.

The Colombo branch of the World Bank did not immediately respond to a request from Sri Lanka. The "key priority" was to move on with debt restructuring and economic reforms to get the country's growth back on track, it said, adding that it would keep talking to Sri Lanka.

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Last year, the government estimated Sri Lanka's GDP to be worth $89 billion. Even with the expected 8.7 per centdecline in GDP this year and taking currency depreciation into account, the economy will still be approximately $75 billion, with a per-capita income of roughly $3,400.

According to the World Bank, low-income nations are those with a 2021 per-capita income of $1,085 or less.

(with inputs from agencies)