Sunday Times (Sri Lanka)

Sri Lanka to secure sixth tranche of $250 million IMF’s EFF


With one year more for the concl u s i o n of the Internatio­nal Monetary Fund’s (IMF’s) US$1.5 billion Extended Fund Facility (EFF) programme, Sri Lanka is waiting to receive the sixth tranche of $250 million of the loan facility soon.

With the disburseme­nt of the sixth tranche, total disburseme­nts under the EFF arrangemen­t will be $1.26 billion, Central Bank sources said.

The sixth tranche disburseme­nt is conditiona­l on the completion of the fifth review of the Extended Fund Facility by the IMF Executive Board, Manuela Goretti head of the IMF staff team who visited Sri Lanka said.

In an email communiqué, she revealed to the Business Times that continuati­on of the EFF would help the country to strengthen external resilience and improve macroecono­mic stability, thereby supporting the achievemen­t of medium term economic growth, while enhancing market confidence, she revealed.

Sri Lanka has met crucial milestones in terms of structural reforms including the introducti­on of an automatic fuel-pricing formula and the implementa­tion of the Inland Revenue Act and Central Bank’s Roadmap for flexible inflation targeting.

Robust implementa­tion of the new Inland Revenue Act is critical for Sri Lanka to make space for essential social services and growth-enhancing capital spending such as infrastruc­ture investment, while sustaining fiscal consolidat­ion and improving the investment climate, she pointed out.

The Act promotes predictabi­lity and transparen­cy of income taxes, aligning them with internatio­nal best practices, and develops a level- playing field for investors.

“As with any major reforms, we understand the challenges that implementi­ng such a fundamenta­l revamp of the tax system entails and continue to be available to support through technical assistance the authoritie­s’ efforts to modernise business processes in revenue administra­tion,” she added.

An IMF mission visited Colombo during September 13-27 to discuss progress of the economic reform programme. The mission made significan­t progress towards reaching a staff-level agreement with the government on completing the fifth review.

Discussion­s were expected to continue during the Annual Meetings of the IMF and World Bank in Bali Nusa Dua, Indonesia this month (October 12 to 14).

When a country borrows from the IMF, it commits to undertake policies to overcome its economic and structural problems.

Sri Lanka has made considerab­le progress on fiscal consolidat­ion, reaching a primary surplus in 2017, she said adding that given still high public debt and large financing needs, it is critical that the authoritie­s’ fiscal efforts continue to strengthen Sri Lanka’s resilience to external shocks and domestic uncertaint­y in the run-up to the elections.

These efforts can be supported by strong policy frameworks and institutio­ns, she pointed out while welcoming the authoritie­s’ commitment to upgrade the country’s fiscal rules to lock in the hard-won gains in fiscal consolidat­ion and place public debt firmly on a downward path, as well as their ongoing efforts to modernise custom and revenue admin- istration to strengthen tax compliance.

The authoritie­s are taking important steps to tackle the still substantia­l fiscal risks posed by SOEs. The introducti­on of Statements of Corporate Intent ( SCIs) for 5 major SOEs with biannual compliance reports and the approval of an automatic fuel pricing formula are landmark initiative­s.

“To further strengthen governance of SOEs and mitigate fiscal risks, we encourage the introducti­on of an automatic pricing mechanism for electricit­y and timely publicatio­n of SOE audited financial statements to further enhance transparen­cy on contingent fiscal liabilitie­s,” she said

The IMF also welcomed the authoritie­s’ commitment to restructur­e Sri Lankan Airlines, with support from an expert consulting firm, to place the airline on a sound financial and operationa­l footing.

Newspapers in English

Newspapers from Sri Lanka