‘Reforms within World Bank likely to benefit Sri Lanka’

By Sanath Nanayyakare

Parameswaran Iyer, the World Bank Executive Director for India and Sri Lanka has told State Minister of Finance Shehan Semasinghe that various internal restructurings within the World Bank could benefit countries like Sri Lanka.

The State Minister mentioned this on April 15 on his X (Twitter) account.

“Mr. Iyer congratulated the Sri Lankan authorities on implementing the series of difficult reforms. He updated us on the various internal restructurings within the World Bank and how these changes could benefit countries like Sri Lanka, and assured his fullest support to Sri Lanka,” Semasinghe noted.

Semasinghe, who is in Washington D.C. for the 2024 Spring Meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) and related ancillary events is accompanied by Dr. Nandalal Weerasinghe, Governor of the Central bank of Sri Lanka and Mahinda Siriwardena, Secretary to the Treasury.

The Spring Meetings comprise joint World Bank-IMF Development Committee and the IMF’s International Monetary and Financial Committee events. The ancillary meetings will be held from April 17 to 19.

“We kicked-off the IMF/WBG Spring meeting with a very productive bilateral discussion with Mr. Kenji Okamura, Deputy Managing Director of the IMF. Mr. Okamura commended the Sri Lankan authorities on strong programme implementation and excellent reform progress. He emphasised the need to preserve the hard earned gains Sri Lanka has experienced since the beginning of the IMF programme and continue strong ownership.”

“I, along with Governor of the CBSL and Secretary to the Treasury, explained to Mr. Okamura the recent socio-economic developments and the authorities’ commitment to ensuring continuity and consistency of macroeconomic policies and reforms undertaken under the programme,” the State Minister noted.

For some years now, the World Bank has been engaged in a series of reforms to modernise and simplify its lending practices in response to concerns by borrowers.

Presenting a paper on the topic the World Bank had recently said the following:

“Among the concerns were that cumbersome and inflexible procedures were impeding rather than facilitating operational work, were not keeping pace with the capacities of our partner countries, and thus were potentially hindering the development impact of Bank-supported development interventions.”

An area has been identified in need of modernising project restructuring and changes in procedures to strengthen the impact of operational work, according to the paper.

Furthermore, it has identified more effective supervision tools such as project restructuring coupled with clear procedures and reinforcing corporate incentives would help improve project implementation results.

It proposes to modify the approach to restructuring during project supervision, to aim for improved developmental outcomes by project closing.

The proposed approach is based on the potential of increasing implementation effectiveness, particularly for projects in the portfolio that contain risk factors.

The paper has also identified current obstacles in order to improve outcomes through more proactive and early restructuring before project problems become irreversible.

However, the timeline is still not clear as to when the proposed changes in the World Bank’s lending practices will benefit countries like Sri Lanka.