We can’t continue second round of negotiations, If IMF report not approved by Parliament: RW

• If one has any issues regarding the IMF report, they could talk it over with the IMF when they come back to Sri Lanka

By Ajith Siriwardana  

President Ranil Wickremesinghe urged the House to support the IMF agreement claiming that Sri Lanka would not be able to continue the second round of negotiations with regard to the IMF fund facility if the House failed to support it.  

“Additionally, the country is expecting about USD 7 billion dollars more in rapid credit support from other parties, he said and added that “ Some people consider the IMF EFF as just another loan, while others claim that the total debt of the country cannot be paid off with the amount received. He noted that these statements show either ignorance or a willingness to betray the country for political gain.”   

“We are now starting a new journey. We have to introduce many economic reforms throughout the process. The foundation for our success will be through this path. Some of these reforms have already been proposed and implemented through the interim budget of 2022 and the budget for 2023. We will introduce numerous other reforms,” President Ranil Wickremesinghe told Parliament during his special statement.   

“The government aims to reduce the primary deficit to 2.3% of GDP by 2025 and increase revenue to 14% of GDP by 2026. The standard corporate income tax rate has been raised to 30%, and sectoral tax holidays have been eliminated. The PAYE tax rate has been raised from 12% to 15%, and the tax exemption limit has been reduced from Rs. 300 million to Rs. 80 million,” he said.   He said the government would introduce Estate Duty as a property tax by 2025, with a minimum tax exemption allowance.   

The President told Parliament that the government was planning to reduce existing tax exemptions on VAT by 2024, remove the simplified VAT system, and expedite its reimbursement.   
The President stated that he had previously requested the support of the opposition in rebuilding the economy, but did not receive it. “I made similar requests during the opening of Parliament and Budget debates, but to no avail. Despite my efforts, the opposition refused to extend their support citing various reasons,” he said.   

He said the Government and the IMF will review the programme every six months.

   
“The first review will take place in June. We have already focused our attention on amending the existing tax mechanism. The Treasury is already in the process of preparing amended proposals. Further, intellectuals and economic experts have already submitted their views in this regard, which we hope to discuss, and reach an agreement.   
We are discussing with the IMF to include these tax reforms in our plans at the review in June. In addition, we are discussing the other policy reforms which we think are necessary at present.   

Some people try to portray that these issues can be solved through beliefs and confrontations. However, these problems have to be solved through caution, care and wisdom.   
He said Sri Lanka cannot simply be satisfied with only the IMF agreement. This is not the end. This is just the beginning of yet another long journey. We have to traverse that path with vigour.   

Discussing with our creditors and restructuring the loans as well as recommencing the process of repayment, is a massive challenge. Increasing the income of the country too should happen simultaneously.   

The local production should be increased. More avenues of foreign income should be explored. We should not only expand our share in the world market but also in our region. A colossal economic reform process should be implemented fearlessly and continuously.   

The IMF-approved plan should be implemented and completed in four years. However, depending on our strength and determination, we should be able to finish it in three to three and a half years. Let’s give it a try. Let us put in the effort,” he added.