Sri Lanka upgraded as upper-middle income country by World Bank
The World Bank has reportedly moved Sri Lanka to the upper-middle income category from lower-middle income category under the Bank’s new country classification by income level.
As of July 1, 2019, Sri Lanka’s Gross National Income (GNI) per capita is US$ 4,060 up from US$ 3,840 reported a year earlier, reports state.
Accordingly, the World Bank has classified the world’s economies into four income groups — high, upper-middle, lower-middle, and low.
The World Bank bases this assignment on Gross National Income (GNI) per capita (current US$) calculated using the Atlas method. The classification is updated each year on July 1st.
According to the World Bank, its classification of countries is determined by two factors.
First is a country’s GNI per capita, which can change with economic growth, inflation, exchange rates, and population. Next is the revisions to national accounts methods and data can also influence GNI per capita.
As for the classification threshold, they are adjusted for inflation annually using the SDR deflator.
Until last year (Fiscal Year 2019), the income classifications had an analytical purpose and did not influence the World Bank’s lending terms.
However, since the last fiscal year, the high-income threshold is also a determining factor for lending rates, a local media report has stated.
Surcharges are applied for lending rates of countries which have been categorized as high income for two consecutive years, the report has further noted.
According to reports, the new thresholds are determined at the start of the World Bank’s fiscal year in July and remain fixed for 12 months regardless of subsequent revisions to estimates.
The thresholds for income classification have increased from last year due to SDR inflation. As of July 1, 2019, the new thresholds for classification by income are:
OSL take:
The upgrading of Sri Lanka as an upper middle income country by the World Bank is indicative of the strong economic policies adopted by the country as well as its growth potential. Hence, Sri Lanka would find it easy to access foreign funding for its development agenda. All these would result in the expansion of business/investment opportunities in Sri Lanka.
| Article Code : | VBS/AT/03072019/Z_2 |