Sri Lankan government and IMF agree to enhance macro-economic management
The International Monetary Fund (IMF) and the government of Sri Lanka have yesterday reached a fresh deal to further strengthen the cooperation between the two by enhancing prudent macro-economic management.
The IMF has stated that it had constructive discussions with the authorities in Colombo and during the Annual Meetings in Washington DC.
In a statement issued in Washington, the IMF has said the 2018 Budget should continue with fiscal consolidation supported by the new Inland Revenue Act.
Furthermore the monetary policy should remain vigilant to pressures on inflation and credit growth.
The IMF has also called for the upholding of the reform momentum as key to addressing vulnerabilities and sustaining inclusive growth.
In its statement the IMF said “The IMF team reached a staff-level agreement with the Sri Lankan authorities on the third review under an economic reform program supported by a three-year Extended Fund Facility (EFF) arrangement, subject to the completion of a prior action by the authorities and the approval of the IMF Executive Board.
“The Board is expected to consider Sri Lanka’s request for completion of the third review in December 2017, by which time the 2018 budget – consistent with the EFF-supported program – is expected to be submitted to Parliament as a prior action. Incorporating the new Inland Revenue Act, the 2018 budget should continue fiscal consolidation supported by stronger revenues.
“The central bank should stand ready to head off pressures on inflation and credit growth, while continuing to enhance exchange rate flexibility.
“The authorities have been improving the country’s fiscal position and strengthened its international reserves, but more needs to be done in the area of SOE reforms. Upholding the reform momentum will be important for addressing fiscal and external imbalances and meeting the government’s ambitious social and development objectives. Renewed effort toward bolstering competitiveness, improving social protection programs, and boosting private sector development will be important for making growth more robust and inclusive.”
Last week the IMF has said, “In Sri Lanka growth is expected to reach 4.7% in 2017 as buoyant construction and services offset weak and weather-affected agriculture.”
The projection of 4.7% is higher than the expectations of the Central Bank, which sees growth ending between 4%-4.5%.
Sri Lanka’s government is also working to strengthen trade relations with top performer countries in the region and is in the midst of negotiating trade deals with India, Singapore and China.
Also, the IMF in its World Economic Outlook launched in Washington last week gave Sri Lanka an optimistic growth projection of 4.7% in 2017 and 4.8% in 2018.
The IMF has projected a growth of 4.7% for Sri Lanka this year when the Central Bank of Sri Lanka has projected growth to be below 4.5% this year. The further strengthening of the cooperation between the IMF and the government of Sri Lanka is a clear indication of the strengthening of the country’s economy. The growth potential and reforms set by the government that have been hailed by the IMF is undoubtedly a confidence booster for those interested in becoming stakeholders of the island nation’s economy.
|Article Code :||VBS/AT/17/10/2017/Z_5|