ECONOMYNEXT – Sri Lanka expects a deal with the International Monetary Fund to be back on track in November Finance Minister Ravi Karunanayake said.
Sri Lanka’s parliament passed a hike in value added tax earlier this week, which can bring in over 100 billion rupees in extra revenue annually.
Sri Lanka will get about 15 billion rupees in extra revenues in the next two months of the tax hike, the Minister Karunanayake told members of Sri Lanka’s Foreign Correspondents’ Association..
The IMF said it was unable to ‘complete a review’ an euphemism to say that the program is in abeyance as Sri Lanka was not able to implement a value added tax hike before June, as originally agreed with the lender.
Sri Lanka attempted to implement the tax under an illegal ‘finance minister’s prerogative’, an anti – democratic practice that had been followed by native rulers for over several decades, despite the existence of a European-style parliament to get the consent of the people for tax hikes.
Activists managed to go to court and block the move this year. However Sri Lanka continues to slap taxes by midnight gazette, a practice which analysts say has to be halted to bring back lost freedoms of the people.
Karunanayake said he expected the IMF deal to be back on track in the ‘next two weeks’.
The 2016 budget deficit could be slightly better than the original target of 5.4 percent of gross domestic product, Finance Minister Ravi Karunanayake said. In 2017 a narrower, 4.7 percent gap is planned.
The hike in value added tax is a key measure to boost state revenues in the years ahead, to match the increases in state salaries and subsidies in 2015.
However last year there was no wage increase. (Colombo/Oct28/2016)