Thursday, December 7, 2023

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IMF expresses concern on Sri Lanka’s shortfall in revenue collection.

By: Staff Writer

Colombo (LNW): The International Monetary Fund is concerned about a shortfall in revenue collection by Sri Lanka’s government this year, though that is unlikely to derail a $2.9 billion loan programme for the crisis-hit country, two Sri Lankan sources said.

Sri Lanka has met International Monetary Fund quantitative targets for June 2023 except state revenues, Central Bank Governor Nandalal Weerasinghe claimed sometimes back.

The IMF program has a set of quantitative targets listed as ‘performance criteria’ which has to be mandatorily or seek a waiver and also indicative targets.

The central government tax revenue floor of Rs 1,300 billion rupees is an indicative target he added.

All the targets have been met, except the revenue target is below,” Governor Weerasinghe disclosed.

Sri Lanka’s tax revenues grew 50 percent to Rs. 1,198 billion rupees up to June 2023, and non-interest spending was kept in check, helping record a primary surplus, official data show.

Non-tax revenues grew 43 percent to Rs. 116.0 billion rupees, according to data released by the central bank.Total revenues grew 43 percent to Rs. 1,317 billion.

However current spending also grew 48 percent to Rs.2, 325.5 billion A large part of the current spending or rs. 1,211.8 billion was interest costs.

A delegation from the IMF met with Sri Lankan President Ranil Wickremesinghe, who is also the finance minister, and its central bank governor, earlier on Tuesday as part of the first review of the four-year loan deal agreed in March.

Such reviews are necessary to continue the programme, which is critical for the country that is slowly recovering from its worst economic crisis in at least seven decades.

“Sri Lanka has met most of the requirements needed to fulfil the first review. This includes progress on domestic debt restructuring,” said one of the sources, who are both government officials and declined to be named.

Sri Lanka’s junior finance minister, Ranjith Siyambalapitiya, told reporters last week that the shortfall could be about 100 billion rupees (about $312 million). The target for the government was to increase revenue to 11.3% of gross domestic product in 2023 from 8.3% last year.

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