Q.8 The World Bank has declared that it does not plan to offer new financing to Sri
Lanka, which is battling its worst economic crisis in decades, until the country has
an adequate macroeconomic policy framework in place. In a statement, the World
Bank said Sri Lanka needed to adopt structural reforms that focus on economic
stabilisation and tackle the root causes of its crisis. The latter has starved it of
foreign exchange and led to shortages of food, fuel, and medicines. The bank is
repurposing resources under existing loans to help alleviate shortages of essential
items such as medicine, cooking gas, fertiliser, meals for children, and cash for
vulnerable households.
Based only on the above passage, which one of the following statements can be
inferred with certainty?
(A) According to the World Bank, the root cause of Sri Lanka’s economic crisis is that
it does not have enough foreign exchange.
(B) The World Bank has stated that it will advise the Sri Lankan government about how
to tackle the root causes of its economic crisis.
(C) According to the World Bank, Sri Lanka does not yet have an adequate
macroeconomic policy framework.
(D) The World Bank has stated that it will provide Sri Lanka with additional funds for
essentials such as food, fuel, and medicines.

 World Bank Sri Lanka Economic Crisis Question Solved

The correct answer is option (C). The passage states that the World Bank will not offer new financing “until the country has an adequate macroeconomic policy framework in place,” directly implying Sri Lanka lacks one currently.​

Option Analysis

• (A) Incorrect: The passage notes the crisis “starved it of foreign exchange,” but attributes root causes more broadly to issues needing structural reforms, not solely foreign exchange shortages.​

• (B) Incorrect: No mention exists of the World Bank advising the government; it only requires reforms for new financing.​

• (C) Correct: “Until the country has an adequate macroeconomic policy framework” infers its absence now, as a prerequisite for aid.​

• (D) Incorrect: The Bank repurposes existing loans for essentials, explicitly avoiding new funds.​

The World Bank Sri Lanka economic crisis declaration halted new financing amid Sri Lanka’s 2022 crisis, marked by foreign exchange shortages and essentials deficits like food, fuel, and medicines. This GATE 2023 verbal aptitude question tests precise inference from the passage, emphasizing structural reforms for stabilization.​

Passage Core Facts

The World Bank demands an adequate macroeconomic policy framework before new loans, repurposing existing ones for urgent needs such as medicines and fertilizers.​

• Crisis effects: Shortages starved imports, hitting vulnerable households.

• Bank action: No new funds until reforms address root causes.

Why Option C Stands Out

Inference hinges on “until…in place,” confirming the framework’s current inadequacy per World Bank view. This mirrors real 2022 events where reserves fell critically low.​

Exam Strategy Tips

For competitive exams like GATE IIT JAM, eliminate options adding unstated details (A, B, D). Stick to direct implications for certainty. Practice similar reading comprehension on economic policy frameworks boosts accuracy.​