ECONOMYNEXT – Sri Lanka will have to wait till the International Monetary Fund (IMF) has completed its first review of the ongoing IMF programme for the government to review its own fiscal policy, an official said, noting however that it will not step out of the programme’s framework regardless.
State Minister of Finance Shehan Semasinghe told reporters on Thursday September 14 that state revenue had not increased to desired levels.
He was responding to questions about ongoing protests by university lecturers against an IMF-prescribed tax hike and whether professionals can expect some relief at the end of this quarter.
“Let’s wait and see until the review is over. State revenue is not where it was expected to be. There are several reasons for that. Until the end of the review, we cannot make a clear statement on how we can bring state revenue to adequate levels,” said Semasinghe.
The state minister said the IMF review, which began on September 14, will continue for two week.
“Let’s see what we’re told after that.
“Regardless, the government is not prepared to work outside the framework of the IMF programme,” he added.
Semasinghe said the government wants the IMF’s 2.9 billion dollar extended fund facility (EFF) to be the last such facility from the international lender.
“The government has already formulated a strong legal framework, instilled fiscal discipline and transparency and accountability that’s needed for that,” he said.
The state minister is also optimistic that Sri Lanka will have no trouble receiving the second tranche of the EFF.
Sri Lanka has fulfilled its obligations and there will be no problem securing the second tranche, he said.
At talks Friday morning, an IMF delegation currently in Sri Lanka have discussed with Finance Ministry and Central Bank officials the challenges ahead both domestically and externally with regard to macroeconomic policy, he said.
“We expect that after this review is over, we can get the second tranche. The second tranche will signal to the world that they can be confident about Sri Lanka’s reforms and reliability,” he said.