IMF reaches staff-level agreement, eyes on Inland Revenue Act

May 04, 2017 (LBO) - An IMF team has reached staff-level agreement with Sri Lankan authorities on the second review under a three-year Extended Fund Facility arrangement, a statement said. The review however hinges on completion of prior actions, such as the new Inland Revenue Act, which will be taken into account by the IMF Executive Board in June. Constructive discussions were held during the visit to Colombo in March, and during the Spring Meetings, an IMF staff team said issuing a statement in Washington DC.

“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.

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. “The team commends the authorities for resuming accumulating net international reserves as a corrective action for missing the end-2016 target.

This reserve accumulation should continue and help reduce Sri Lanka’s external vulnerability. The statement added that Sri Lankan authorities are making progress in their economic reform program, particularly on improving the fiscal position. "Maintaining the reform momentum in an uncertain external environment will be important for addressing fiscal and external imbalances.”