Sri Lanka transitions towards a middle-income country

World Bank Managing Director Ngozi Okonjo-Iweala, who held talks with Rajapaksa, pledged increased support for the government of Sri lanka.

She futherly mentiioned “strong and expanding support to Sri Lanka as it transitions towards a middle-income country in lasting peace,” .

At the end of her two-day visit here last night, Okonjo-Iweala said that Sri Lanka sought USD 500 million in financial assistance in 2011, even though the country is yet to finalise the projects to be funded with that money.

She said Sri Lanka will be able to draw up to USD 465 million next year as the island nation was now eligible for commercial loans through the IBRD - International Bank for Reconstruction and Development - an arm of the World Bank.

“Now we are opening up access to more commercial, harder-term IBRD funds of about 230 to 265 million dollars a year. We will be doubling access,” she said. “We will be approaching 405 to 465 million dollars a year in 2011.”

Sri Lanka will be entitled to draw from the Bank’’s concessionary arm -- the IDA, International Development Association -- for about three more years, Okonjo-Iweala said.

“Sri Lanka will be able to have a combination of IDA and IBRD loans,” she said, adding that the Bank’’s total credit to the country could reach USD 465 million in 2011, up from under USD 200 million.

She said the World Bank funding could complement the bilateral loans Sri Lanka negotiates with China and India as well as others. “This shows Sri Lanka’s credit worthiness.”

“I think Sri Lanka needs to be congratulated on managing good progress on the economic front and also trying to move ahead after the conflict,” she said. “We see peace. Build on it.”

“We think near term economic prospects are good. Economy is growing about 7.0 per cent. We think the (2011) budget is a credible budget,” Okonjo-Iweala said, adding that the government must ensure equitable growth to sustain peace.

Sri Lanka’s economy is set to grow by a strong nine per cent in 2011, up from eight per cent this year and 3.5 percent in 2009 when government forces were locked in a final battle with the LTTE.