Treasury seeks $1 bln IMF budgetary support facility
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Confirms Sunday Times Oct 7, 2012 exclusive
By Bandula Sirimanna
Sri Lanka is seeking a US$ 1 billion Extended Fund Facility or Budget Support Facility from the International Monetary Fund (IMF) to continue its economic development activities, Dr. P.B. Jayasundera, the country’s most powerful economic bureaucrat, said. In making the announcement, the Treasury Secretary confirmed the plan to get an IMF facility which was exclusively reported in the Sunday Times on 7th October 2012.
He emphasised to reporters at a packed news conference on Friday to discuss new tax proposals that the IMF loan is for the Treasury and aimed at reinforcing the domestic financial system maintain monetary stability and implement the country’s development projects. It is not for the Central Bank, he noted.
Treasury Secretary Dr. P.B. Jayasundera stresses a point at the news briefing. Pic by Athula Devapriya
Negotiations on this facility will be top of the agenda with a team of IMF officials who will be visiting Sri Lanka next month on a 2-week official tour for annual ‘Article IV’ consultations, he revealed.
The government is expecting to cut foreign borrowings by 55.7 percent to Rs. 86 billion from Rs.194 billion rupees in 2012. There are no commercial borrowings listed in the budget.
However he noted that the country needs financial assistance from foreign countries and foreign lending institutions within a short period and it should not attach unacceptable conditions.
Answering a question raised by a journalist, he said the IMF should be happy to extend a financial facility to Sri Lanka as it is the best country in the region in terms of debt repayment.
Dr. Jayasundera said Sri Lanka’s foreign reserve position is sound at the moment and what the country needs is quick financial assistance with low interest and without strings attached to it.
Referring to the implementation of the tax proposals in the 2013 budget, he said that the Inland Revenue Department has already made top level management adjustments and a one stop shop was set up at the IRD office in Colombo to provide all assistance to tax payers and they will not have to go after tax consultants.
Similar facilities would be made available at 15 regional IRD offices in order to motivate tax payees’ towards voluntary compliance. He disclosed that the IRD has already sent letters to 11,000 small businesses that they will not have to pay VAT under the 2013 budget proposals.
Only the supermarkets and wholesale dealers which have a turnover of Rs.500 million per quarter are liable for 12 per cent VAT but ultimately it will pass on to consumers and suppliers, he said adding that it is simple economics.
But normal retail business will not have to pay it, he emphasized.
Dr. Jayasundera noted that tax concessions have been given to Small and Medium Scale enterprises and even big corporates have to pay 12 per cent tax which is the lowest in any standards He called upon people who are liable to pay income tax to make their payments voluntarily as the money is being used for development activities in the country for the benefit of everyone.
All professionals – doctors, engineers, teachers and others who are drawing a monthly income of over Rs. 50,000 should pay 2 per cent income tax and their compliance is satisfactory, he disclosed.
He said that even politicians are now paying taxes and other eligible tax payers should follow suit.
Outlining improvements in the Sri Lanka Customs, Dr. Jayasundera said that it will soon be provided with faster and efficient Automated System for Custom Data (ASYCUDA) World program to cater to the increasing demand in the system.
ASYCUDA World is expected to make available faster clearance for cargo consignments, improve revenue control and collection and generate up-to-date trade statistics to make informed policy decisions. The computer based programme is also believed to minimize long term administrative costs, he revealed.
Improvement in Customs is essential to cater to the needs of the growing tourism industry and upcoming free port facilities.
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