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Sri Lanka’s World Bank upgradeA milestone but not the finish lineJuly 5, 2026 By Rathindra Kuruwita Sunday Observer LKSri Lanka has returned to the World Bank’s Upper-Middle-Income category, an international acknowledgement that the country has moved some distance away from the economic collapse of 2022.The World Bank described Sri Lanka’s case as a story of recovery, saying that the real Gross Domestic Product (GDP) grew by 5 percent in 2025, supported by a rebound across industries and growth in financial and tourism services.However, economists said that the economy is still fragile and that the National People’s Power (NPP) Government must continue its drive towards industrialisation and agricultural modernisation while enhancing State capacity.Ceaseless vigilance neededSri Lanka has been an upper-middle-income country before. It first reached Upper-Middle-Income status on the basis of 2018 data, with the World Bank publishing the classification in July 2019. But this came at a time when deeper weaknesses were already visible. A 2018 World Bank development update, titled More and Better Jobs for an Upper Middle-Income Country, stated that Sri Lanka needed stronger private investment, an export-led growth model, better jobs, higher productivity and deeper reforms to sustain progress. The country needed structural change to make the achievement durable.Instead of structural changes aimed at continued growth, the disastrous economic policies of the Gotabaya Rajapaksa Government contracted the economy sharply, drove inflation to 70 percent, collapsed the reserves and the State lost access to international capital markets.The latest upgrade signals that policies of the Government have produced results. Economics don and Director of the Postgraduate Institute of Humanities and Social Sciences (PGIHS) at the University of Peradeniya, Prof. Wasantha Athukorala said the improvement reflected the fiscal discipline of the Government. The stricter management of tax revenue, tighter control of Government spending and close supervision of the economy all contributed to the country’s return to Upper-Middle-Income status.The Central Bank too played a decisive role by maintaining strict oversight of monetary policy, he said. The combination of fiscal discipline and monetary restraint helped restore stability after a period when the State could neither finance itself easily nor maintain public confidence in the currency, Athukorala said.Sri Lanka could not have recovered without restoring basic macroeconomic order, i.e., improving revenue collection, bringing public spending under control, keeping inflation at desired levels and rebuilding the external buffers. Therefore, the upgrade is evidence that the economy has turned a corner, strengthens the case for investment, improves the country’s image among international partners and supports the argument that Sri Lanka is again a country where long-term decisions can be made with more predictability.Perception mattersPerception matters for a country that suffered a sovereign default only a few years ago. Internal and external stakeholders such as investors, lenders and development partners watch classifications, credit ratings, reserves, debt negotiations and policy consistency. The Upper-Middle-Income label alone will not bring investment, but it can help improve sentiment when combined with credible policy.Economist Umesh Moramudali said the classification sends a positive signal to investors. Given that the upgrade suggests that the economy is growing, it is useful if Sri Lanka decides to return to international bonds by reducing the risk premium demanded by investors.Sri Lanka is expected, under the broad assumptions of the IMF-supported program, to consider a return to International Sovereign Bond (ISB) markets in the coming years. Moramudali said while a positive international signal can help, the Government must have a clear borrowing strategy.Moving up the income classification can also mean gradually losing access to concessional financing. Sri Lanka has benefited from low-interest loans from institutions such as the International Development Association (IDA). As the country becomes a higher income country, such access can decline over time, pushing the country towards market borrowing.Concessional loans come with lower interest rates and longer repayment periods. International sovereign bonds are more expensive, short term and more sensitive to market confidence. An Upper Middle Income classification can help Sri Lanka borrow at a lower cost, but market borrowing remains costlier and riskier than concessional finance.A positive signThat does not make the upgrade meaningless. The Opposition is likely to argue that the people do not feel the Upper-Middle-Income in their daily lives. The Government itself agrees that the cost of food, transport, education, health care and debt repayments still weigh heavily on familiesThe Government’s task now is to convert stabilisation into better living conditions. The country has moved from collapse to recovery but it has not yet achieved shared prosperity.Sri Lanka’s structural weaknesses remain despite efforts of the Government. Exports are still too low as a share of GDP, Foreign Direct Investment (FDI) remains weak and the external situation remains volatile. The revenue gains have improved the fiscal position, and the Government must sustain it without overburdening the same taxpayers. The tax net must widen, administration must improve and growth must generate more revenue naturally.A boost in State capacity is needed to widen the tax net, improve the general administration of the State and to generate more organic growth. Governance may have taken the country to the upper-middle-income category again, but many public institutions are still abysmally weak, inefficient and corrupt. A more complex economy requires stronger institutions, better regulation, and officials capable of dealing with global investors, lenders and trade partners.The Government can use the moment to attract investment, promote exports, deepen tourism, expand the digital economy, and improve confidence. It can also use it to convince people why reforms must continue and as proof that discipline has worked. Taxes, subsidy reforms and reduced public spending has stabilised the economy, but they have also placed a heavy burden on households. The Government now has to protect the hardest hit by this burden through targeted relief, stronger social protection, continued investment in health and real attention to regional development. The recovery will be politically secure only when people begin to see it in their wages, jobs, public services and daily cost of living.Sri Lanka’s return to Upper-Middle-Income status is a recovery milestone but the lesson from 2019 shows us that staying there, and moving beyond it, requires the Government to manage the economy with ceaseless vigilance.
Soccer Football - FIFA World Cup 2026 - Round of 32 - United States v Bosnia and Herzegovina - San Francisco Bay Area Stadium, Santa Clara, California, U.S. - July 1, 2026 Folarin Balogun of the U.S. is shown a red card by referee Raphael Claus REUTERS/Phil Noble/File PhotoSoccer-Trump calls Balogun red card U-turn a 'brilliant decision', UEFA says FIFA 'crossed a red line'By Reuters July 6, 2026SummaryTrump calls FIFA decision to allow Balogun to play 'brilliant'FIFA keeps Balogun's red card but suspends one-match ban for one yearBelgian Football Association to challenge player's eligibilityBalogun had scored three goals for the United States before his Bosnia red cardWASHINGTON, July 6 (Reuters) - President Donald Trump on Monday said FIFA's move to suspend U.S. striker Folarin Balogun's red-card ban at the World Cup was a "brilliant decision" after he personally contacted global soccer boss Gianni Infantino on the matter, but European soccer body UEFA said FIFA had "crossed a red line".The affair has thrown a spotlight on FIFA's disciplinary process and prompted the Belgians, who play the U.S. later on Monday for a place in the quarter-finals, to challenge Balogun's eligibility for the match. The player was sent off for a tackle during the U.S.' win over Bosnia and Herzegovina, a punishment that usually carries an automatic one-match ban.Trump, speaking in the Oval Office, said he had contacted Infantino to ask him for a review of the case."He (Balogun) didn't do anything wrong and he is our best player," Trump said. "When they take your best player and say 'You can't play' it's very unfair.""I think they made a really brilliant decision," Trump said. "I asked for a review. If they would not allow a top player to play I think it (the World Cup) would have had a big stain. I related that feeling."The incident has rapidly become the tournament's biggest talking point, overshadowing tactics and team selection and instead putting the focus on the relations between sport and political power."We express our disbelief at such an unprecedented, incomprehensible and unjustifiable decision," UEFA said on Monday, adding that: "Yesterday's decision ... crossed a red line"."When the certainty of rules is no longer guaranteed by its guardians, the integrity of the game is at stake and the credibility of a competition is undermined."Several national football federations have been equally critical of FIFA's decision."It is fundamental that the existing regulations are predictable, transparent, and equal for everyone. If a red card, which normally leads to a suspension, is then postponed in the middle of an ongoing championship without clarity as to why and how the regulations should apply, we find that very problematic," Swedish Football Association President Simon Astrom told TT.ELIGIBILITY CHALLENGEThe Royal Belgian Football Association said it was challenging FIFA's decision to declare Balogun eligible to play on Monday."The RBFA has still not received any decision or any explanation from FIFA regarding this matter," it said in a statement."Regardless of the sporting outcome of this match, the RBFA is deeply concerned by the course of events and will continue to fight in the coming hours, days and months in defence of the fundamental principles of ethics, fair competition, and the interests of football as a whole."The high-profile criticism also echoed that from some big names in the sport."This is our sport, not theirs," said former Liverpool boss Juergen Klopp, in talks to become the new Germany coach."If Donald Trump and Gianni Infantino really sorted this out between themselves, it is madness; it calls everything into question. These two people, who know nothing about football, should have absolutely nothing to do with this."As criticism spilled over into the political sphere, the European Commissioner for Sport warned against "the weaponisation of sport for political purposes."Within minutes, Sunday's decision to suspend the ban was dominating sports bulletins and talk shows as pundits, commentators and former players argued over whether FIFA had upheld justice or undermined its own rules.FIFA did not respond to Reuters' requests for comment about the decision and Trump's call with Infantino.It is not the first time this year that FIFA has been accused of mixing politics with sport, with FIFA boss Infantino attending President Trump's Board of Peace meeting in February and facing subsequent questions about the body's political neutrality.'GREAT INJUSTICE'Balogun, who has scored three goals for the U.S. in the tournament, was sent off after a VAR review for dragging his cleats down the back of defender Tarik Muharemovic's leg and onto his foot during their win over Bosnia and Herzegovina in the round of 32.The red card carried an automatic one-match ban, ruling Balogun out of Monday's tie with Belgium. FIFA instead suspended the ban for a one-year probationary period without rescinding the card itself.Trump thanked FIFA on Truth Social "for doing what was right, and reversing a great injustice," while the White House celebrated Balogun's reinstatement with a post on X saying: "USA-USA-USA."England manager Thomas Tuchel questioned the decision, having just seen his defender Jarell Quansah get sent off in his side's 3-2 last-16 win over Mexico."Who overturns this decision then and when? And on what grounds? How far does this go now? This is strange for me," Tuchel told reporters at the Azteca Stadium.Even former FIFA boss Sepp Blatter, who stepped down in 2015 amid corruption allegations, joined the criticism."Red cards are not overturned by political phone calls. They are overturned by rules, evidence and independent bodies," he said. "If a U.S. President intervenes with the FIFA President — and a player is suddenly cleared before a World Cup knockout match — the question is unavoidable: Quo vadis, FIFA? Football must never become a playground for political power."Writing by Karolos Grohmann; Editing by Hugh Lawson
