22 March 2024 01:24 am Views - 755
Sri Lanka has made significant progress, despite its circumstances, in implementing its ambitious reform agenda. However, the International Monetary Fund (IMF) asserted it is necessary for the island nation to stay on course so that it reaches the aspired goals.
Following the completion of the second review of the Extended Fund Facility (EFF) bailout programme, the visiting IMF delegation emphasised that sustaining the momentum of reforms is critical to steer the economy toward lasting recovery and foster stable, inclusive economic growth.
The delegation welcomed Sri Lanka’s commitment to fiscal reforms, but asserted that continued progress towards the introduction of the property tax is critical. This is together with revenue measures to meet the revenue mobilisation goals in 2025 and beyond.
“Revenue administration and anti-corruption efforts to boost tax collections are also key. Maintaining cost recovery in fuel and electricity pricing will help minimise fiscal risks arising from state-owned enterprises,” said IMF Senior Mission Chief Peter Breuer addressing journalists in Colombo yesterday along with Deputy Mission Chief Katsiaryna Svirydzenka.
While inflation has decelerated faster than expected, the Mission Chief said continued monitoring is warranted to help anchor inflationary pressures and support macroeconomic stability.
“Against ongoing external uncertainty, it remains important to continue to rebuild external buffers through strong reserves accumulation,” he said.
Commenting on Sri Lanka’s agreements in principle with the Official Creditor Committee and Export-Import Bank of China on debt treatments, the delegation pointed out that the critical next steps are to reach finalisation.
These were some of the important milestones to help put the island nation’s debt on the path towards sustainability.
Sri Lanka must step up efforts and reach agreements in principle with the main external private creditors in line with programme parameters in a timely manner, Breuer said, pointing out that this should help restore Sri Lanka’s debt sustainability over the medium term.
The IMF also noted that the authorities’ recently published Action Plan to implement the key recommendations of the Governance Diagnostic Report is a welcome step.
“Sustained efforts to implement these reforms will be essential for addressing corruption risks, rebuilding economic confidence, and making growth more robust and inclusive,” Breuer said.
During the two week visit, the IMF mission team met with tea plantation workers in Nuwara Eliya and learned first-hand about some of the challenges Sri Lanka’s most vulnerable face. According to the delegation, continued efforts to improve targeting, adequacy, and coverage of social safety nets, particularly Aswesuma, remain critical to protect the poor and the vulnerable.
While carrying out the review, the IMF team held meetings with President and Finance Minister Ranil Wickremesinghe, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Minister of Power and Energy Kanchana Wijesekera, State Minister Shehan Semasinghe, Chief of Staff to the President Sagala Ratnayaka, Secretary to the Treasury K. M. Mahinda Siriwardana, and other senior government and CBSL officials.
The team also met with parliamentarians, representatives from the private sector, civil society organisations, and development partners.