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Wrapping up Sri Lanka external debt deals critical, property tax needed: IMF

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Sri Lanka’s economy is starting to recover under a stabilization program, and further progress has to be made on debt restructuring while monetary policy decisions have to be prudent to keep inflation down, an International Monetary Fund official has said.

“A swift completion of final agreements with official creditors and reaching a resolution with external private creditors remain critical,” IMF Senior Mission Chief Peter Breuer said after a staff visit.

“Building on the Central Bank of Sri Lanka’s success in taming inflation, future monetary policy decisions should remain prudent with a focus on keeping inflation expectations well anchored.”

The mission called for a speeding up a “progressive property tax”.

Swift progress towards the introduction of a progressive property tax is key to ensuring fair burden sharing while sustaining the revenue-based consolidation.

The full statement is reproduced below:

Colombo, Sri Lanka – January 19, 2024: An International Monetary Fund (IMF) mission team led by Mr. Peter Breuer visited Sri Lanka from January 11 to 19, 2024 to discuss recent macroeconomic developments and progress in implementing economic and financial policies under the EFF arrangement. At the end of the mission, Mr. Breuer issued the following statement:

“The economic reform program implemented by the Sri Lankan authorities is yielding the first signs of recovery. Real GDP recorded positive growth of 1.6 percent year-on-year in the third quarter of 2023, the first expansion in six consecutive quarters. Shortages of essentials have eased, and inflation remains contained. Gross international reserves increased by USD 2.5 billion during 2023, and preliminary data point to improved fiscal revenue collections during the fourth quarter of 2023. However, challenges remain as these improvements need to translate into improved living conditions for Sri Lanka’s people.

“In this context, sustaining the reform momentum and ensuring timely implementation of all program commitments are critical to rebuilding confidence and putting the recovery on a firm footing that will benefit all people. Swift progress towards the introduction of a progressive property tax is key to ensuring fair burden sharing while sustaining the revenue-based consolidation.

Tax policy measures need to be accompanied by strengthening tax administration, removing tax exemptions, and actively eliminating tax evasion to make the reforms more sustainable and to further build confidence among creditors to support Sri Lanka’s efforts to regain debt sustainability.

“Building on the Central Bank of Sri Lanka’s success in taming inflation, future monetary policy decisions should remain prudent with a focus on keeping inflation expectations well anchored. Against continued uncertainty, it remains important to continue rebuilding external buffers through strong reserve accumulation. Protecting the poor and the vulnerable through improved targeting and better coverage of cash transfers remains critical.

“To safeguard the stability of the financial sector and bolster its capacity to support economic growth, the authorities need to urgently finalize amendments to the Banking Act in line with their commitment under the IMF-supported program, implement the bank recapitalization plan and strengthen the financial supervision and crisis management framework.

“Following the publication of the IMF Governance Diagnostic report, it is now imperative for the authorities to adopt their own action plan for implementing the recommendations in the report beyond the priority commitments under the EFF arrangement. At the same time, ensuring an enabling environment for governance and transparency reforms to take place is key to bolstering public confidence and facilitating implementation of these important efforts.

“The authorities have made commendable progress with putting debt on a path towards sustainability. The execution of the domestic debt restructuring was an important milestone. A swift completion of final agreements with official creditors and reaching a resolution with external private creditors remain critical. Progress in meeting key commitments under the IMF-supported program will be formally assessed in the context of the second review of the EFF arrangement alongside the forthcoming 2024 Article IV consultation assessing Sri Lanka’s economic health.

“The IMF team held meetings with President and Finance Minister Ranil Wickremesinghe, Central Bank of Sri Lanka (CBSL) Governor Dr. P. Nandalal Weerasinghe, Speaker Mr. Mahinda Yapa Abeywardana, Minister Mr. Kanchana Wijesekera, Minister Mr. Wijeyadasa Rajapakse,State Minister Mr. Shehan Semasinghe, Secretary to the Treasury Mr. K M Mahinda Siriwardana, Governor of Northern Province Mrs. P.S.M.Charles, Governor of Eastern Province Senthil Thondaman, and other senior government and CBSL officials. The IMF team also met with Parliamentarians, representatives from the private sector, civil society organizations, and development partners.

“We would like to thank the authorities for the excellent collaboration during the mission, including during the mission’s visit to the Northern and Eastern provinces. This visit enriched the mission team’s understanding of the challenges as well as the potential of Sri Lanka. We reaffirm our commitment to support Sri Lanka for a full economic recovery from the crisis.”

(economynext.com)

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No vehicles or vehicle permits for MPs – President

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Parliamentarians will not receive vehicles or vehicle permits this year, President Anura Kumara Dissanayake said.

He said this while delivering the 2025 Budget speech in Parliament today (Feb. 17).

The President also added that measures will be taken to auction off all luxury vehicles in the state sector in March 2025.

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Human Immunoglobulin case : Lab reports from India & Germany received

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Sri Lanka has received laboratory reports from India and Germany regarding the human immunoglobulin drug.

The police confirmed that a team of officers had traveled to those countries to obtain the reports.

The Attorney General’s Department stated that the reports will be used as evidence, and a final decision on the case will be made after they are thoroughly examined.

(News1st)

(Except for the headline, this story, originally published by News1st has not been edited by SLM staff)

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Train numbers in daily operations to be upped to reduce delays

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Deputy Minister of Transport and Highways, Dr. Prasanna Gunasena, announced that steps are being taken to increase the number of locomotives in daily operations to reduce train delays ahead of the introduction of electric trains in Sri Lanka

He emphasized the importance of improving train punctuality, stating that the government is actively addressing service cancellations. Currently, Sri Lanka operates around 217 to 220 daily train services, with 17 to 20 cancellations on average. The goal is to minimize cancellations and maintain consistent operations.

Dr. Gunasena noted that while the country typically requires 60 to 70 locomotives for smooth daily operations, only 45 to 50 have been available in recent times. However, efforts are underway to increase this number, with the expectation that over 60 locomotives will be in service by the end of February.

Additionally, he highlighted that currently, 52% of trains operate on schedule, while 17% experience delays exceeding 10 minutes, and 10% are delayed by more than 30 minutes. The government aims to improve these figures by enhancing locomotive availability and efficiency.

(dailynews.lk)

(Except for the headline, this story, originally published by dailynews.lk has not been edited by SLM staff)

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