Despite struggling economy, South Sudan gets World Bank ‘upgrade’

The World Bank announced last week its new income classification for countries that could potentially influence the type of assistance these nations may receive from the Washington, D.C.-based financial institution. The new threshold, traditionally based on a nation’s per capita income, grew consistently across all income classifications. Countries are considered low-income if their gross national income per capita is $1,045 or less — up by $10 from $1,035 last year — while the threshold for the lower-middle income countries also increased to $1,046 to $4,125 from $1,036 to $4,085 last year. GNI per capita for upper-middle income countries, on the other hand, grew to $4,126 to $12,746 — up from $4,086 to $12,615 last year — while the threshold for high-income countries also spiked to at least $12,746 from $12,616 a year ago. The income classification for countries set by the World Bank plays a crucial role in identifying the level and kind of development assistance the bank will extend. The multilateral institution offers two financial instruments called the International Development Assistance for low-income countries and the International Bank for Reconstruction and Development for middle-income economies and poorer nations with good credit standing. Other countries, such as Cameroon and Sri Lanka, are classified as “blend” economies because they are IDA-eligible in terms of their per capita income but are performing strongly in terms of economic development, making them eligible for IBRD borrowing. As expected, India moved up from its blend status to now becoming fully IBRD-eligible. Angola, Armenia, Bosnia-Herzegovina and Georgia join the Asian country as new members of the category. As a result of a rebasing of its gross domestic product, Nigeria has been upgraded to blend status. Although not yet IDA graduates, Cameroon and Congo join Nigeria as countries that can be extended IBRD loans on top of concessional lending. Notably, South Sudan — along with Kyrgyzstan — has been updated from low-income to lower-middle-income status, with its GNI per capita rising from 650 in 2012 to $1,120 in 2013. The world’s newest country remains mired in conflict, which had a negative impact on oil production — its main source of income. In addition, famine is looming over South Sudan, an indirect result of the fighting that has displaced millions and disrupted farming. The bank does note that these income classifications are just used for “convenience” and not an absolute reflection of each country’s economic development. Check out more practical business and development advice online, and subscribe to Money Matters to receive the latest contract award and shortlist announcements, and procurement and fundraising news.