A staff team from the IMF led by Jaewoo Lee visited Colombo during September 13-23
OREANDA-NEWS. End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
A staff team from the International Monetary Fund (IMF) led by Jaewoo Lee visited Colombo during September 13-23, 2016 to hold discussions on the first 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 its social and development program. At the end of the visit Mr. Lee made the following statement:
“The mission made significant progress toward reaching a staff level agreement with the government on completion of the first review. Discussions will continue in October in Washington D.C. during the Annual Meetings of the IMF and World Bank.
“Overall, macroeconomic performance in first half of 2016 reflected a mix of improving balance of payments, reduced growth mainly related to recent floods, and slightly higher inflation. The mission welcomes the effective tightening of fiscal and monetary policies that contributed to improving market confidence and easing pressures on external balances.
“The mission commends the authorities for implementing their IMF-supported economic program under difficult circumstances, with all quantitative targets through end-June being met. However, some forward looking aspects of the program review, mainly related to the implementation of the tax reform package, need to be addressed without further delay.
“Accordingly, it is important that the government expedites the legislative process of implementing the value added tax (VAT) amendments that are needed to support revenue targets for 2016 and 2017. The 2017 budget should also be underpinned by a well-crafted and high-quality tax policy strategy to raise Sri Lanka’s low tax revenue-to-GDP ratio. Commencing the legislative process for the new Inland Revenue Act would be an important step in rebalancing the tax system toward a more predictable, efficient and equitable structure and in generating the needed resources in support of the country’s ambitious social and development objectives.