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Hands off Budget: IMF told
By Feizal Samath
The International Monetary Fund (IMF) has been told by the UPFA government to “stay away” from preparations for the forthcoming November 18 budget, a departure from recent practice where the IMF had regular pre-budget discussions with those drafting the budget.

“We are not discussing budget issues (with the Treasury) unlike in the past. We don’t have any details of the budget. The government has said it would discuss the budget after it is presented … not before,” said the IMF’s Sri Lanka representative, Jeremy Carter. “That’s a decision the government has made. We respect it.”

Mr. Carter, who has been handling Sri Lankan issues for the IMF for the past five years inclusive of 2 ½ years as the country desk officer in Washington, said he was unable to say why there was a departure from the recent tradition. “We often have had detailed discussions on the budget (with the Treasury) in the past including last year. Our comments and endorsements were requested before the budget on various programmes.”

It was unclear as to why the government chose this step. Its key coalition partner, the JVP, however has been repeatedly critical of IMF and World Bank policies and so-called interference in economic policy formulation. Treasury Secretary P.B. Jayasundara told reporters recently that the Washington lending twins were putting too much pressure on Sri Lanka. That statement hasn’t been denied and may be one of the reasons why the IMF has not been consulted in the budget preparation.

Mr. Carter said, “As of now we won’t be able to comment on anything in the budget because we don’t know what it contains.” A private sector economist said that in such a situation, the IMF may not be able to provide assistance to any project proposed in the budget that requires fund assistance because “one can’t go on the presumption that the IMF would support it (and present it on that basis).”

He said the government appeared to be resorting to the 1970s’ styled budgets of then Finance Minister N.M. Perera when the government raised revenue through gazette notified-taxes while “goodies” were delivered in the budget. “You see this happening now. Take for example the vehicle taxes and the (new) taxes imposed on Friday. The budget will probably come up with wage increases and taxing the rich,” the economist said.

MF’s Carter said he expected a review team here next month for discussions with the government. “Nothing would happen until we sit and have (fresh) discussions with the government.”

Any expectations from the budget? “We hope the deficit would be reduced and revenue through taxes improved. We also hope it is a budget that could be implemented,” he said. Finance Minister Sarath Amunugama or Treasury Secretary Jayasundara was not immediately available for comment on these developments.

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