Sri Lanka seeks to modify performance criteria; EFF broadly on track: IMF

Jan 12, 2018 (LBO) – Sri Lanka’s performance under the Extended Fund Facility (EFF) program has remained broadly on track despite a series of weather-related supply shocks, the IMF said. Following the Executive Board’s discussion of the third EFF review, Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director of IMF, said country’s fiscal performance has been satisfactory and all targets until September were met. “Nevertheless, Sri Lanka’s high debt burden, large gross financing needs, and weak financial performance of state-owned enterprises increases the importance of further fiscal consolidation,” Furusawa said. “Timely progress in structural reforms, including tax administration and energy pricing, will support fiscal consolidation.” Sri Lanka’s budget targets a primary surplus of 1 percent of GDP and frontloads fiscal consolidation towards the authorities’ objective of reducing the overall fiscal deficit to 3.5 percent of GDP by 2020. Meanwhile, in a letter to IMF’s Christine Lagarde, Finance Minister and Central Bank Governor has requested the modification of the performance criterion on central government primary balance and the indicative target on tax revenue for December 2017. The primary balance of the central government on cash basis is defined as central government revenues and grants minus expenditures and net lending, plus interest payments. Central government tax revenue refers to revenues from taxes collected by the central government. It excludes all revenues from asset sales, grants, and non tax revenues.