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Sri Lanka not eligible for ADB soft loans from 2019

Aug 17, 2018 09:00 AM GMT+0530 | 0 Comment(s)

ECONOMYNEXT – Sri Lanka will no longer be eligible for Asian Development Bank (ADB) soft loans from January 2019 given its economic progress and rising per capita gross national income (GNI).

According to the ADB, Sri Lanka will graduate to its Group C countries, under a reclassification, eligible only to borrow from the lender’s ordinary capital resources (OCR) from next year.

Sri Lanka is now in group B, known as OCR-blend, for countries eligible both for soft loans and OCR with access to Regular Ordinary Capital resources.

ADB uses a classification system to determine the eligibility of developing member countries (DMCs) to borrow from ordinary capital resources at near-market terms, or at concessional OCR loan terms, or to receive grants from the Asian Development Fund (ADF).

DMCs are classified based on two main criteria, GNI per capita and creditworthiness for regular OCR loans or market-based loans.

Sri Lanka has now graduated above the Per Capita GNI cut-off.

A DMC graduating from either concessional assistance or regular OCR resources may be eligible for these resources again if its economic conditions deteriorate, the ADB said.

Regular market-based OCR loans are generally made to developing member countries that have attained a higher level of economic development while concessional OCR loans are made to lower-income DMCs.

To finance its OCR lending operations, ADB issues debt securities in the international and domestic capital markets.

ADB's debt securities carry the highest possible investment ratings from major international credit rating agencies.
(COLOMBO, 17 August, 2018)


 

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