banner1

 

Dec 14, 2017

IMF suggests SL to further accumulate foreign reserves

The International Monetary Fund (IMF) has suggested Sri Lanka to” further accumulate foreign reserves and enhance exchange rate flexibility to reduce Sri Lanka’s external vulnerability.

“Structural reforms are also needed to enhance competitiveness and promote inclusive growth, including measures to improve trade and investment regimes “IMF said.

“Inflation and credit growth remain on the high side.IMF pointedout adding that maintaining a tightening bias for monetary policy is recommended until clear signs emerge that inflation pressures and credit expansion have subsided.

Fiscal performance has been satisfactory and all targets until September were met. The new Inland Revenue Act will make the tax system more efficient and equitable, and generate resources for social and development programs.

Nevertheless, Sri Lanka’s high debt burden, large gross financing needs, and weak financial performance of state-owned enterprises increases the importance of further fiscal consolidation. Timely progress in structural reforms, including tax administration and energy pricing, will support fiscal consolidation IMF said.

The Executive Board of the IMF completed the third review of Sri Lanka’s economic performance under the program supported by a three-year extended arrangement under the Extended Fund Facility (EFF) arrangement.

Completion of the review enables the disbursement of the equivalent of SDR 177.774 million (about US$ 251.4 million), bringing total disbursements under the arrangement to the equivalent of SDR 537.456 million (about US$ 759.9 million).

Sri Lanka’s three-year extended arrangement was approved on June 3, 2016, in the amount of about SDR 1.1 billion (US$1.45 billion, or 185 percent of quota in the IMF at that time of approval of the arrangement.

Top