IMF makes good progress in talks on Lankan economic reforms
The International Monetary Fund (IMF) is expected to make good progress in discussions with Sri Lankan authorities on the economic reform programme supported by the fund at the IMF spring meetings now being held in Washington, the IMF has said.
In a reply to an email query, IMF spokesperson Raphael Anspach told the Business Times that the IMF Executive Board will reach an agreement after completing the fourth review of the three year Extended Fund Facility(EFF) obtained by Sri Lanka.
The successful conclusion of the review will enable the disbursement of the fifth tranche of the US$1.5 billion facility, he disclosed.
Sri Lanka has so far received a total of $759.9 million under the EFF and there was no indication from the IMF that it will withhold the disbursement of next tranche over concerns that the government is yet to fulfill its commitments given to implement the fuel pricing formula and reforms to make state-owned enterprises (SOEs) more profitable, a senior Treasury official told the Business Times.
Recently, an IMF mission led by Manuela Goretti had constructive discussions with the Sri Lankan authorities on the 2018 Article IV Consultation and made progress towards a staff-level agreement on the fourth review of the EFF-supported programme, he disclosed.
Issuing a media release, the IMF noted that Sri Lanka’s progress in revenue-based fiscal consolidation has helped preserve space for public investment and social spending while bringing down public debt.
It says further revenue mobilisation is needed to meet the 2018 primary surplus target and reduce the overall deficit to 3.5 per cent of GDP by 2020.
The new Inland Revenue Act (IRA) represents a major achievement towards a simpler and more equitable tax system, and its smooth implementation will be critical, the IMF emphasised.
According to the global lender, Sri Lanka should immediately tackle fiscal risks including ineffective implementation of the IRA, further delays in SOE reforms, and failure to provide for weather calamities.