Sri Lanka IMF deal to get back on track with new income tax law
May 04, 2017 06:24 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka has reached agreement to continue a deal with the International Monetary Fund subject to presenting a new income tax law to parliament.
Sri Lanka IMF program was paused with review scheduled for December being paused due to delays is fiscal reforms and missing a forex reserve target.
IMF staff and Sri Lanka has agreed on a new 'staff level agreement' for the next phase of the agreement, which will have to ratified by the Fund's board in June.
"The Board is expected to consider Sri Lanka’s request for completion of the second review in June 2017, by which time the new Inland Revenue Act is expected to be submitted to Parliament as a prior action," an IMF statement said.
"The new law should pave the way for a durable fiscal consolidation based on revenue mobilization—a key pillar of the government’s reform program."
Businesses have called for more consultation on the proposed law.
Sri Lanka missed a target for foreign reserves amid money printing.
Independent analysts had warned form the beginning that the program was seriously flawed in not placing a ceiling on domestic asset accumulation of the central bank (money printing).
Such ceiling would not only restrain the central bank's tendency to print money, accelerate credit and de-stabilize the monetary system but would also protect it from fiscal dominance during the times when it was prepared to pursue more prudent policy.
Sri Lanka central bank has a history of printing money to suppress interest rates or finance the budget deficit drive credit up and hurt exchange rate stability. (Colombo/May04/2017)