The IMF mission in Colombo on Wednesday (27) in its End-of-Mission press releases included statements of IMF staff teams that convey preliminary findings after a visit to a country.
Staff-Level Agreement:
According to the statements made NO staff-level agreement was reached during the first review of the IMF-supported Extended Fund Facility program.
“The team will continue its discussions in the context of the First Review with the goal of reaching a staff-level agreement in the near term. We reaffirm our commitment to support Sri Lanka at this difficult time.”
Second Tranche of the EFF:
In addition, there was NO indication on the release of the second tranche of the bailout package, which is USD 330 Million.
External Debt Restructuring:
Another key point in the statement was that Sri Lanka had not completed the external debt reworking, a vital component in securing the full bailout package.
“The authorities have also made headway on regaining debt sustainability through the execution of the domestic debt restructuring and advancing discussions with external creditors. As Sri Lanka is restructuring its public debt which is in arrears, Executive Board approval of the first program review requires the completion of financing assurances reviews.”
“These financing assurances reviews will focus on whether adequate progress has been made with debt restructuring to give confidence that it will be concluded in a timely manner and in line with the program’s debt targets.”
Tax and Revenue:
The IMF mission notes that the authorities have met the program’s primary balance targets and remain committed to this important pillar of the program so as to support their efforts to restore debt sustainability.
However, revenue mobilization gains--while improved relative to last year--are expected to fall short of initial projections by nearly 15 percent by year end.
“To increase revenues and signal better governance, it is important to strengthen tax administration, remove tax exemptions, and actively eliminate tax evasion.”
Economic Recovery:
Despite early signs of stabilization, full economic recovery is not yet assured.
Reserves:
Reserve accumulation has slowed in recent months.
Reforms:
“Discussions are on-going, and the authorities are continuing to make progress on their plans for revenue mobilization targets, anti-corruption efforts, and other important structural reforms.”
(newsfirst.lk)
