The state minister’s overall claim is that Sri Lanka is making steady progress towards achieving fiscal stability. To support this claim, the state minister points out that Sri Lanka has achieved a primary balance of positive LKR 48 billion, against the IMF programme projection of negative LKR 56 billion for the first quarter of 2023. The primary balance is the difference between revenue and expenditure (excluding interest payments).
To check his overall claim on fiscal stability, FactCheck.lk consulted the 2022 Ministry of Finance Annual Report (MoFAR), the IMF Staff Report (IMFSR), and the IMF tracker managed by Verité Research (see https://manthri.lk/en/imf_tracker).
MoFAR records that Sri Lanka’s primary balance for the first quarter of 2023 was a positive balance of LKR 48.3 billion, surpassing the IMF’s projection of negative LKR 56 billion, as claimed by the state minister.
However, the state minister has cherry picked one narrow indicator of fiscal performance, without considering other important indicators such as revenue, and interest cost (see full fact-check on the website for further information). The IMF set out targets for 1) tax revenue collected by the end of the first quarter of 2023, set at LKR 650 billion, and 2) an effective interest rate of 7.2% for the year 2023, which includes unpaid interest for bilateral and commercial debt. Based on FactCheck.lk’s calculations on the available data, the expected paid-out interest cost for the first quarter of 2023 amount to less than LKR 500 billion (see full fact-check on the website for further information).
The government fell short of the IMF’s tax revenue target of LKR 650 billion, by collecting only LKR 578 billion (MoFAR). The paid-out interest costs for the same period, amounted to LKR 673.1 billion, significantly exceeding the expected interest cost of under LKR 500 billion.
While the state minister is correct in stating that Sri Lanka has overperformed on the primary balance target for the first quarter of 2023, Sri Lanka has fallen short of other IMF critical indicators related to fiscal stability. The broader claim on fiscal stability is not supported by the achievement of just one indicator of fiscal performance.
Therefore, we classify the state minister’s statement as Partly True.
FactCheck is a platform run by Verité Research.
For comments, suggestions and feedback, please visit www.factcheck.lk.