ECONOMYNEXT – Sri Lanka’s new tax law is a ‘credit positive’, paving the way for revenue reforms critical for improving the island’s credit profile and IMF loan disbursement, Moody’s rating agency said.
“The implementation of revenue reforms that foster long-term fiscal consolidation will be critical to shoring up Sri Lanka’s credit profile,” Moody’s Investors Service said in a statement.
Given Sri Lanka’s weak fiscal position and need for growth-enhancing public expenditure on infrastructure and development programs, the government’s plans to increase revenues will play an important role in bolstering debt sustainability and fiscal consolidation, it said.
“Revenue mobilization efforts will help create fiscal space for such increased spending and deficit reduction, while also tempering external vulnerabilities,” the rating agency said. “If successful, these measures will contribute to the strengthening of Sri Lanka’s credit profile.”
However, Moody’s said they expect the benefits of revenue reforms to accrue slowly over time.
(COLOMBO, July 04, 2017)