ECONOMYNEXT – Sri Lanka has met 29 commitments in an International Monetary Fund program co-financed by the World Bank and the Asian Development Bank according to an analysis by Verité Research, a Colombo-based think tank.
The program has core performance criteria on the IMF program and a series of structural benchmarks mostly supported by budget finance loans from the World Bank and ADB.
Verité monitors 100 ‘trackable commitments’ and said 29 had been met.
By end May Sri Lanka has failed to meet a 650 billion rupee revenue target for March, the analysis said. The March revenue number is an indicative target.
Sri Lanka has also failed to increase rates of the Betting and Gaming Levy.
The changes involved increasing the annual levy on gaming to Rs 500 million, the annual levy on betting carried through agents to Rs. 5 million, the annual levy on betting carried using live telecasting to Rs. 1 million, the annual levy on betting carried without live telecasting to Rs. 75,000 and the levy on gross collection to 15 percent, Verete said.
The establishment of an online fiscal transparency platform, was partially met by end-May.
This platform is expected to publish, on a semi-annual basis, information related to (i) all significant public procurement contracts, (ii) a list of all firms receiving tax exemptions through the Board of Investment, and (iii) a list of individuals and firms receiving tax exemptions on luxury vehicle imports.
A bill was published on the 4th of April but an amendment to the act has not been made.
The third unmet commitment was parliamentary approval of the new Central Bank Act, prepared in consultation with IMF staff.
Critics have said the controversial act legalizes printing money for growth (output gap targeting) which will allow aggressive open market operations to de-stabilize the monetary sector as had happened in recent years and also perpetuate money exchange conflicts/
Despite deflationary monetary policy, which supports upward pressure on the rupee the rupee went on a wild ride from 291 to 320 to the US dollar in June, due to an error in exchange policy and has appreciated back to 306 to the US dollar.
The law by mandating ‘independence’ for ‘flexible’ inflation targeting and ‘flexible’ exchange rate prioritizes discretion over rules, critics say.
It also has weak accountability provisions. (Colombo/June20/2023)