GATE 2023 AE – Question 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?
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Show answer and explanation
Correct answer: (C) According to the World Bank, Sri Lanka does not yet have an adequate macroeconomic policy framework.
Explanation
Test each option against what the passage states.
- **A. The root cause of the crisis is the lack of foreign exchange.** The passage says the crisis has *starved* the country of foreign exchange. The shortage is a consequence, not the root cause. ✗
- **B. The World Bank will advise the government on how to tackle the root causes.** The passage only says that Sri Lanka needs reforms. It does not say the Bank will advise. ✗
- **C. According to the World Bank, Sri Lanka does not yet have an adequate macroeconomic policy framework.** The Bank will give new financing only "until the country has an adequate macroeconomic policy framework in place", which implies it does not have one now. ✓
- **D. The Bank will provide additional funds for essentials.** The passage says it is *repurposing existing loans*, which is not new money. ✗
Answer **C**.