The International Monetary Fund (IMF) yesterday said Sri Lanka’s upcoming 2018 budget should continue fiscal consolidation, supported by the recently passed Inland Revenue Act.
The IMF in a press communiqué acknowledged that the Sri Lankan authorities have been improving the country’s fiscal position and strengthened its international reserves.
But the multilateral lender highlighted that more needs to be done in the area of state-owned enterprises (SOEs).
“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 programmes and boosting private sector development will be important for making growth more robust and inclusive,” the communiqué noted.
The IMF also reiterated its earlier position that the country’s Central Bank should remain vigilant to the pressures on inflation and credit growth, while continuing to enhance exchange rate flexibility.
The IMF team has reached a staff-level agreement with the Sri Lankan authorities on the third review on the economic reform programme 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 programme—is expected to be submitted to parliament as a prior action,” the IMF communiqué said.