IMF throws host of fiscal & monetary targets at govt.
The International Monetary Fund yesterday revealed the quantitative and policy criteria that the Sri Lankan government needs to meet in order to remain qualified for the US$ 1.5 billion Extended Facility Fund.
“These break down into two areas. One is a set of quantitative targets,” Sri Lanka Mission Chief Todd Schneider said while addressing a media gathering via teleconferencing yesterday.
The IMF has stipulated that the primary fiscal deficit should be at Rs. 97 billion for 2016, and Rs. 3 billion for 2017, compared to Rs. 241 billion in 2015.
Net official international reserves should meet a surplus US$ 671 million by December 2016 and US$ 1.34 billion by December 2017, compared to a deficit of US$ 1.49 billion in December 2015.
The IMF said that inflation should ideally remain at 5.2 percent and 5.1 percent by December 2016 and December 2017 respectively, while setting 8.2 percent and 8.1 percent respectively for the same periods as an upper limit on inflation. Lender turns excessively prescriptive over conditions for first time Sets an upper limit for inflation at 8.2% for 2016 BOP should turn a surplus of US $ 671mn in 2016 Govt. must raise revenue by Rs.70 bn during the year
Tax revenue should increase to Rs. 1.43 trillion for 2016, and Rs. 1.72 trillion for 2017, compared to Rs. 1.36 trillion in 2015.
The Central Bank’s reserve money ceiling was set to be Rs. 797 billion by December 2016 and Rs. 893 billion by December 2017, compared to Rs. 673 billion as at December 2015.
Schneider said that the quantitative requirements will be evaluated semiannually based on indicative targets, coinciding with the semi-annual disbursement of funds.
“The other set of conditions are really related to what we call structural benchmarks which are not quantitative, but are related to passage of legislation, cabinet approval of strategy, publication of certain documents,” Schneider said.
The structural benchmarks include state enterprise reforms, with the most immediate requirement being the passing of a resolution strategy for Srilankan Airlines.
The benchmarks also include tax reforms and public financial management.