Lanka: Middle Income status
The International Monetary Fund (IMF) has, on January 11, graduated
Sri Lanka from the list of Poverty Reduction and Growth Trust (PRGT)
Accordingly, Sri Lanka will now be recognised as a country with a
middle income emerging market status.
CB Governor Ajith Nivard Cabraal
This upgrade would facilitate Sri Lanka to project itself strongly in
international financial and capital markets.
A country graduates from PRGT only if it, (i) has enjoyed income per
capita well above the International Development Association (IDA)
threshold for a number of years, (ii) has the capacity for durable and
substantial access to international financial markets, and (iii) does
not face serious short-term vulnerabilities.
The Executive Board of the IMF has taken into account the following
specific factors in considering of Sri Lanka’s graduation.
The strong economic performance in recent years that has
substantially lifted Sri Lanka’s per capita Gross Domestic Product (GDP)
to US $ 2,014 by 2008, well above the prevailing IDA threshold, and its
per capita Gross National Income (GNI) has not been on a declining trend
for the last five years.
The strong growth performance has signalled substantial resilience to
shocks, including shocks to oil prices, and to the expiration of the
The International Monetary Fund headquarters
The availability of an IMF Stand-by Arrangement facility as approved
in July 2009 to cushion the impact of the global crisis. Further, the
economic developments under the program have been stronger than
expected, with GDP growth expected to return to almost pre-crisis levels
in 2010, while exports have been showing signs of recovery.
The country’s public external debt being projected to decline
gradually over the medium term. Although debt dynamics remain sensitive
to currency depreciation and export shocks, the timely implementation of
fiscal consolidation, as envisaged in the Stand-by Arrangement program,
will be crucial to ensure that the public debt remains on a sustainable
The country’s ability to access international capital markets in the
past years and its ability to meet the market access criterion.
Oversubscription of the recently issued five-year sovereign bond
reflected the progress made under the Fund-supported program, and
signalled good prospects for continued access to international capital