World Bank unlikely to cut cheap aid to Sri Lanka despite rising incomes

May 03 (LBO) – The World Bank has not taken a decision to end concessionary lending to Sri Lanka despite the tsunami-hit island reporting more than 1,000 dollar per capita income for the third-straight year, a top official said Wednesday. Sri Lanka's 24 billion dollar economy boasted a 1,250 dollar per capita income for 19.5 million people last year, according to Finance Ministry figures.

Countries which consistently report income in excess of 1,000 dollars usually get eased off grant and International Development Association (IDA) cheap funds, into non-concessional loans close to market rates.

But World Bank country Director, Peter Harrold says to the fragile situation in Sri Lanka which has a debt to GDP ratio of 94 percent as well as a simmering civil conflict, may allow the country to get cheap loans from the Bank in the foreseeable future.

"The Bank will asses the situation and we will know the decision in a few months, but reporting higher per capita GDP does not automatically disqualify a country from receiving concessional loans," Harrold said.

Even if such a decision is made, the shift will be gradual. India and Pakistan already have a mix of concessional and non-concessional aid.

While IDA loans come at