The International Monetary Fund (IMF) says that the passage of Sri Lanka’s landmark new Inland Revenue Act is a major achievement which will in turn support the government’s ambitious social and developmental programme.
The observation was made by visiting IMF mission leader, Jaewoo Lee, during an end-of-mission press conference held in Colombo on Friday (29).
A staff team from the IMF led by Jaewoo Lee visited Sri Lanka during September 18-29 to hold discussions on the third review of the Sri Lankan authorities’ economic program that is being supported by a three-year Extended Fund Facility (EFF).
The program aims to support the authorities’ ambitious reform agenda to put public finances on a sustainable footing and create space for social and development program
The mission commended the Sri Lankan Government for the strong efforts in implementing their IMF-supported economic reform program with all quantities performance targets through end-June 2017 having been met and the landmark Inland Revenue Act (IRA) legislation passed by Parliament.
“Progress, on the other hand, has been mixed in implementing structural reforms – especially in relation to state owned enterprises (SOEs) and public financial management,” Mr Lee said.
He also said that the Central Bank of Sri Lanka (CBSL) should continue to remain vigilant in monitoring inflation pressures and stand ready to tighten monetary policy if needed to contain inflation or credit growth.
“The CBSL’s drive towards gradually rebuilding reserves should continue.” In this regard, the mission welcomed the CBSL’s commitment to develop a roadmap for flexible inflation targeting and a flexible exchange rate regime, which it said will require strengthening the legal frameworks for CBSL’s governance, improving market functionalities, and enhancing communication.
The IMF mission leader further stressed that the acceleration of implementing structural reforms in public financial management and SOEs is an “important priority.”
“Large financial obligations of SOEs pose fiscal risk and need to be managed by enhancing oversight of performance indicators, developing SOE-specific reform strategies, and following through on fuel and electricity pricing reform,” he said.
The mission also welcomed the broad-based strategy for improving trade and investment climate, which will help bolster competitiveness and boost private sector-led growth.
