Sri Lanka loses concessional financing from World Bank
ECONOMYNEXT – Sri Lanka has graduated from concessionary International Development Association window loans in July, World Bank Senior Country Economist for Sri Lanka and the Maldives Ralph van Doorn said.
Sri Lanka has relied more on commercial borrowings in recent years, pushing up interest costs, requiring more careful debt management, van Doorn said.
Sri Lanka has been tapping capital markets, ahead of losing concessionary financing from agencies such as the World Bank and Asian Development Bank as well as bilateral donors.
The World Bank has two main credit windows. IDA and the International Bank for Reconstruction and Development, which are London Interbank Offered Rate plus rates. IDA loans go up to 30 to 40 years while IBRD loans range from 8 to 20 years.
From 2018 to 2020 Sri Lanka will receive ‘IDA transition financing’ the World Bank has said.
The World Bank’s private sector unit, the International Finance Corporation, is also financing Sri Lanka.
Higher economic growth, and lower deficits could help bring down debt, he said. Sri Lanka’s deficit reduction was on track at the moment, he said.
Sri Lanka’s external debt risk was high, though at the moment foreign reserves were stronger and growing. (Colombo/Nov03/2017)