Question

The World Bank has declared that it will not offer new financing to Sri Lanka until the country has an adequate macroeconomic policy framework. It adds that Sri Lanka needs structural reforms for stabilisation and to tackle root causes of the crisis. The crisis has starved the country of foreign exchange and led to shortages of essentials. The Bank is repurposing existing loans to ease shortages. Based only on this passage, which statement can be inferred with certainty?

• A. According to the World Bank, the root cause of Sri Lanka's crisis is a lack of foreign exchange.
• B. The World Bank has stated that it will advise Sri Lanka about how to tackle the root causes.
• C. According to the World Bank, Sri Lanka does \emph{not yet} have an adequate macroeconomic policy framework.
• D. The World Bank has stated that it will provide \emph{additional} funds for essentials.

Hint:

For "inferred with certainty" questions, stick strictly to what is explicitly stated or unequivocally implied. Words like additional, advise, or claims about root cause need explicit support.

Answer 1

The Correct Option is C

Step 1: Key facts from the passage.
(i) No new financing until Sri Lanka has an adequate macroeconomic policy framework.
(ii) World Bank will repurpose existing loans (not add new funds).
(iii) Crisis \(\Rightarrow\) shortage of foreign exchange and essentials.

Step 2: Test each option against the text.
(A) Says the root cause is lack of foreign exchange. The passage says the crisis has caused a forex shortage (an effect), not that forex shortage is the root cause \(\Rightarrow\) cannot be inferred.
(B) Passage says Sri Lanka "needs to adopt structural reforms," but does not say the Bank will advise how to do so \(\Rightarrow\) not certain.
(C) If new financing is withheld until an adequate framework is in place, it implies such a framework is not yet in place \(\Rightarrow\) certain.
(D) It is repurposing existing loans, not providing additional funds \(\Rightarrow\) false.

Final Answer:
\[ \boxed{\text{(C) According to the World Bank, Sri Lanka does not yet have an adequate macroeconomic policy framework.}} \]