Contrary to Misleading Claims, World Bank Forecasts Slight Reduction in Sri Lanka’s Poverty Rate in 2024!

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During the tenure of former President Gotabaya Rajapaksa, Sri Lanka experienced its worst economic crisis in its post-independence history. The situation was exacerbated by policy decisions attributed to the Rajapaksa brothers, who held prominent positions in the government. The Supreme Court of Sri Lanka ruled them responsible for these decisions. The COVID-19 pandemic and some other factors also significantly contributed to the crisis.

However, under the current administration of President Ranil Wickremesinghe, the economy has shown gradual improvement, as affirmed by international institutions like the IMF and World Bank. Despite this progress, social media posts disseminating misleading information about economic indicators have caused public panic about the future.

Social Media Posts

Social media posts claim that the World Bank predicted that poverty in Sri Lanka will increase up to 24% in 2024, compared to 19% in 2023.

Facebook | Archived

We decided to do a fact-check on this.

Fact Check

According to the data provided by the World Bank’s Poverty & Equity and Macroeconomics, Trade & Investment Global Practices, the poverty rates are measured across three income categories: international poverty rate, lower middle-income poverty rate, and upper-middle-income poverty rate. Let’s look at the latest figures concerning Sri Lanka for each of these poverty lines.

International Poverty Line: ($2.15 per person per day)

In 2023, the percentage of Sri Lankans living below the international poverty line was around 5.2%. The World Bank predicts it will decrease to approximately 4.7% by the end of 2024.

Lower Middle Income Poverty Line: ($3.65 per person per day)

In 2023, the percentage of people living below the lower middle-income poverty rate was approximately 25.9%. The forecast for 2024 indicates a decrease to about 24.8%.

Upper Middle Income Poverty Rate: ($6.85 per person per day)

In 2023, the percentage of people living below the upper middle-income poverty rate was around 66.6%. The forecast for 2024 suggests this could decrease to about 65.8% for Sri Lanka.

WB | Archived

These projections clearly show that the World Bank anticipates reducing poverty rates across all income categories in Sri Lanka by 2024. Therefore, the social media post has falsely attributed the World Bank to a misleading claim.

According to Sri Lanka’s development update report issued by the World Bank in April 2024, while poverty in Sri Lanka has continuously increased over the past four years (2019-2023), it is expected to slightly decrease in the 2024-26 period as seen by the below projections as well.

Furthermore, the World Bank’s recent press release highlights signs of stabilisation in Sri Lanka’s economy. However, the forecasted lower middle-income poverty level above 22% until 2026 underscores the importance of implementing social welfare programs alongside necessary economic reforms.

The World Bank report emphasises the need for concerted efforts to address poverty and ensure sustainable development. It also highlights that constructive reform implementation needs to continue before and after the upcoming elections.

Sri Lanka Economic Crisis & Signs of Economic Recovery

With the unfortunate onset of the COVID-19 pandemic and controversial policy decisions taken during the tenure (2019 November-2022 July) of former President Gotabaya Rajapaksa, the nation faced considerable difficulties, including food shortages, long fuel queues, and medicine scarcity.

However, under President Wickremesinghe’s current regime, the government undertook significant structural and policy reforms to restore macroeconomic stability, and the economy showed initial signs of stabilisation in 2023 as external and fiscal balances improved.

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Conclusion

In conclusion, the data provided by the World Bank contradicts the claim circulating on social media. The World Bank`s projections indicate a downward trend in poverty rates for Sri Lanka in 2024, emphasising the need for continued efforts to address poverty and promote inclusive growth.