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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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US embassy – NDDCB conducts training to combat synthetic drug threat

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The U.S. Embassy in Sri Lanka, in collaboration with the National Dangerous Drugs Control Board (NDDCB), concluded a two-week regional training initiative focused on identifying and analyzing synthetic drugs and new psychoactive substances, particularly fentanyl and its analogs – substances that have become an urgent global concern. 

The training culminated in a formal handover ceremony of drug testing equipment, where U.S. Deputy Chief of Mission Jayne Howell, Deputy Minister of Public Security and Parliamentary Affairs Sunil Watagala, and NDDCB Chairman Dr. Indika Wanninayake presided over the presentation of the Radian ASAP instrument to Sri Lankan authorities. 
As part of the U.S. Department of State-funded regional initiative, Upgrading Forensic Lab Capabilities, the Bureau of International Narcotics and Law Enforcement Affairs (INL) has partnered with the Colombo Plan to strengthen synthetic drug detection across South Asia. Forensic professionals from Sri Lanka, Maldives, Bangladesh, and Nepal participated in two weeks of intensive classroom and hands-on training in Colombo to prepare for the installation of advanced drug detection equipment in their national laboratories. 

Each country will receive a Radian ASAP drug testing machine—a compact, cutting-edge system designed for rapid, high-confidence screening of synthetic substances in under a minute. Requiring no complex sample preparation, this technology is ideally suited to detect emerging drug threats efficiently and bolster regional forensic capabilities. 

This initiative aligns with broader U.S. efforts to disrupt the supply chains of synthetic opioids worldwide, reflecting recent White House executive actions taken to combat the global spread of fentanyl. In the United States, these substances have been declared a national emergency, with focused measures to block precursor chemicals and hold illicit producers accountable. 

During the handover ceremony of the drug testing equipment, U.S. Deputy Chief of Mission Jayne Howell stated: “The United States is confronting the fentanyl crisis at home and abroad because the threat knows no borders. That’s why we’re investing in regional partnerships like this one—to stop synthetic drugs before they take hold. Through this initiative, we’re not only sharing advanced tools and training, we’re reinforcing a shared commitment to public health and regional security. This work reflects broader U.S. efforts to disrupt global synthetic opioid supply chains and protect communities across the Indo-Pacific.” 

Equipment donations to labs in Maldives, Bangladesh, and Nepal are scheduled to follow. The U.S. remains committed to strengthening the region’s ability to detect and disrupt synthetic drug flows through technical cooperation and capacity building.

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SLTB to recruit female drivers and conductors

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The Sri Lanka Transport Board (SLTB) is to recruit drivers and conductors on a contract basis, the state owned ‘Daily News’ reports.

According to the report, there are 425 vacancies for male drivers and 25 female drivers will also be recruited.

There are 275 vacancies for male conductors and 25 female conductors will also be recruited compulsorily, the report adds.

The report further notes : 

This endeavour aims to strengthen the public transport service, which is currently operational with over 25,000 employees in 107 depots across the country. A newspaper advertisement was published yesterday with the deadline for applications being July 31.
Applicants are required to present their original School Leaving Certificate (Student’s Progress Report) and other educational certificates at the interview.

The SLTB emphasised that incomplete or non-compliant applications will be rejected.

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Welfare Benefits Board Chairman resigns?

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The Chairman of the Welfare Benefits Board (WBB) – the body responsible for distributing the ‘Aswesuma’ benefit, has submitted his resignation to the Ministry of Finance, state owned newspaper ‘Silumina’ reports.

Retired special grade officer of Sri Lanka Administrative Service (SLAS) – Mr. Jayantha Wijeratne was recommended for the post by the then President in Aug. 2023.

Following the  approval of the Constitutional Council, the appointment was made through letter PED/S/BDA/2022 issued by the Secretary to the Ministry of Finance, Economic Stabilization & National Policies.

Meanwhile, 299,532 beneficiaries have been selected for the second phase of the ‘Aswesuma’ program.

Appeals and objections will be accepted until July 21.

(Source: Silumina)

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