IMF team here, fiscal reforms top agenda
by Lalin FERNANDOPULLE
A team from the International Monetary Fund (IMF) is expected to
arrive in Sri Lanka this month to review the conditions for the
disbursement of the third tranche of the Stand-by Agreement, said
Resident Representative IMF, Dr. Koshi Mathai.
He said the focus of the visit would be to discuss the 2010 Budget
and fiscal policy reforms vital to reduce the budget deficit and enhance
State revenue.
The IMF at its last meeting in Colombo in February called upon the
government to introduce urgent fiscal reforms to bridge the deficit and
promote revenue generating sources to the country.
"Reforms in the tax system call for a more simplified and broadbased
tax structure to help generate revenue in a more efficient way to the
country", Dr. Mathai said.
The disbursement of the third tranche of the Stand-by-Agreement which
was expected early this year was put on hold due to the fiscal
authorities failing to meet the IMF budget targets for 2009. The IMF
budget deficit target was 7 percent of the GDP but year end deficit
overshot the GDP close to 10 percent. The IMF approved a loan of US$ 2.6
billion to Sri Lanka mid last year to support the country's dwindling
foreign reserves and help put government finances on a more stable
footing.
The country's foreign reserves hit rock bottom in early 2009 with
hard currency sufficient only to service three weeks of imports.
The second tranche of around US$ 330 million was released in November
last year. The IMF program focuses on three elements, namely boosting
foreign reserves at the Central Bank, maintaining a sensible monetary
policy and reducing the budget deficit.
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