COLOMBO: “It is important that the Government expedite the legislative process of implementing the Value Added Tax (VAT) amendments that are needed to support revenue targets for 2016 and 2017,” said International Monetary Fund (IMF), representative, Jaewoo Lee in Colombo.
He said that commencing the legislative process for the new Inland Revenue Act would be an important step in rebalancing the tax system towards a more predictable, efficient and equitable structure and in generating the needed resources in support of the country’s ambitious social and development objectives.
Lee who led an IMF mission said that 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. According to Lee, the mission made a significant progress to reach a staff level agreement with the Sri Lankan Government on completion of the first review.
He said further discussions in this regard will take place next month in Washington DC during the Annual Meetings of the IMF and World Bank.
Welcoming moves by the Central Bank of Sri Lanka (CBSL) to preemptively raise policy rates to maintain inflation within its target, they said that the CBSL should remain vigilant in monitoring inflation pressures and stand ready to tighten further, should inflation or credit growth continue to rise.
The mission also encourages the CBSL to continue its effort to rebuild international reserves and maintain exchange rate flexibility to further develop the foreign exchange market. The mission also commended the authorities for implementing their IMF supported economic programme under difficult circumstances with all quantitative targets.
“However, some forward looking aspects of the programme review, mainly related to the implementation of the tax reform package, need to be addressed without further delay,”
Lee also highlighted that the mission encourages the Sri Lankan Government to make concerted efforts in implementing structural reforms in public financial management and state owned enterprises that are building on technical assistance received over the years.
The fist review of the Sri Lankan authorities’ economic programme , related to the three –year Extended Fund Facility(EFF), granted by the IMF was highly discussed by the IMF mission that visited Sri Lanka last week.
The mission also had discussions with several key Government representatives including President Maithripala Sirisena, Prime Minister Ranil Wickremesinghe, Finance Minister Ravi Karunanayaka and Central Bank Governor Dr Indrajit Coomaraswamy in this regard.
The IMF mission also discussed with Sri Lankan business community, civil society and international partners.
