New Delhi, July 3 -- COLOMBO - Four years ago, Sri Lanka was distributing rice rations at government offices because the state could not import cooking gas. This week, the World Bank assigned the island nation to its upper-middle income tier - the first time Sri Lanka has held that status.

The World Bank's annual income reclassification, which takes effect every July 1, placed Sri Lanka, Vietnam, the Philippines, Jordan and the Pacific state of Micronesia in the upper-middle income bracket, defined as a gross national income per capita between $4,636 and $14,375, calculated using the Atlas method. Venezuela and Ethiopia moved in the opposite direction.

The shift is a ledger entry, not a declaration of victory. The threshold that Sri Lan...