The Cabinet of Ministers has granted approval for the proposal to downgrade Sri Lanka’s status from a ‘middle-income country’ to a ‘low-income country’, the Cabinet Spokesman says.
Joining the Cabinet press meeting held today, Minister Bandula Gunawardene stated that Sri Lanka was declared a middle-income country in accordance with international classification, adding that foreign loan assistance cannot be obtained under concessional conditions when a country is internationally recognized as a middle-income country.
This classification is done according to the per capita income of the country, the minister explained while emphasizing that Sri Lanka’s per capita income dropped in recently along with the economic downturn.
“If we refer to the history, during the period of 56 years from 1948 to 2004, the average economic growth rate of our country was less than 5 percent for more than a century.”
At the time of the independence, the per capita income of the country was USD 120 and it took 56 years to reach USD 1,000 mark, he added.
Minister Bandula Gunawardena, who mentioned that especially with the end of the civil war and the conflicts in the northern and eastern parts of the country, economic activities were expanded to a larger extent, further stated that thereafter, there was an awakening in the mass production process.
“As a result, by 2014, when the per capita income reached USD 3,827, Sri Lanka got out of the ‘low-income’ classification and joined the ‘middle-income’ status. In 2017, it was USD 4,074, in 2018 it decreased to USD 4,057 and in 2019 it further dropped to USD 3,848. In 2020, it was USD 3,695 and USD 3,815 in the year 2021.”
Since this per capita income is expected to continue to drop in 2022, the international organizations have informed the Minister of Finance that in order to facilitate the intervention of the international organizations in obtaining concessional loan assistance during this difficult time, the country should be classified as a ‘low-income country’ again, he explained further.
