EXTERNAL DEBTS ,PROPERTY TAX NEEDED TO WRAP UP EXTERNAL DEBTS-IMF

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

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.”

NEWS

President addresses NAM Head of State Session

President Ranil Wickremesinghe commended President Yoweri Museveni for assuming leadership at the 19th Non-Aligned Movement (NAM) Summit in Kampala, Uganda and expressed gratitude to President Museveni and Uganda for hosting the summit.

He highlighted the current global challenges, including the humanitarian crisis in Gaza, the shift in the post-Cold War order, and emerging multipolar dynamics.

President Wickremesinghe emphasized the need for NAM to reinvent itself, transforming into the largest bloc representing the Global South.

Proposing the recognition of Palestine and addressing various geopolitical, economic, and technological issues, he called for a united NAM with updated objectives to build a multipolar world.

The President urged for a dynamic bloc capable of shaping the new global order, emphasizing that the future lies in their hands.

President Wickremesinghe further said that Sri Lanka also proposes that the State of Palestine be established within 5 years. “There cannot be a two state solution based on one state – Israel. No resolution is possible without a state of Palestine. Therefore, in line with multiple UN Resolutions, and the Declaration of this Summit, the international community must recognise the West Bank, Gaza and East Jerusalem as territories coming within the State of Palestine and in addition there should be no change in the ethnic composition of Gaza. Sri Lanka also proposes that the State of Palestine be established within 5 years and no more,” he said.

Minister of Foreign Affairs, Mr. Ali Sabry PC, Minister of State Mr. Chamara Sampath Dasanayake, Members of Parliament Mr. Kings Nelson, Mr. Nimal Piyatissa, Mr. Kumarasiri Ratnayake, Mr. Udayakantha Gunathilake, President’s Secretary Mr. Saman Ekanayake, President’s Senior Adviser on Climate Change Mr. Ruwan Wijewardene were also present on this occasion.

NEWS

Chinese Ambassador meets Speaker

Ambassador of the People’s Republic of China to Sri Lanka – Mr. Qi Zhenhong met with the Speaker – Mahinda Yapa Abeywardana, today (19) in Parliament.

Acting Secretary General of Parliament Mr. Chaminda Kularatne was also present at this meeting.

The Chinese Ambassador conveyed the greetings of the Chairman of the Standing Committee of the National People’s Congress of the People’s Republic of China (Speaker of the Parliament of the People’s Republic of China) Mr. Zhao Leji for the new year to Mr. Abeywardena.

Furthermore, cordial discussions were held between the two parties and the Chinese Ambassador stated his appreciation of Sri Lanka’s support regarding the ‘One China’ Policy. Mr. Abeywardena had stated that as a government, Sri Lanka always accepts the ‘One China’ policy.

Apart from the stated, discussions at length were held between the two parties regarding Chinese investment and development projects in Sri Lanka, including the Colombo Port City Project.

NEWS

Over 14,000 farms in SL have closed down!

The Committee on Public Accounts (COPA) revealed that more than 14000 farms in Sri Lanka have been closed and this has been identified according to the data received from the provinces. The officials pointed out that most of these farms are small-scale farms and most of these farms have been closed due to animal theft.

COPA pointed out that it is not acceptable to say that farms are closing down only because of the frustration of small-scale farmers due to animal theft. Officials pointed out that the destruction of pastures needed for cattle and land-related problems have also caused this. Thus, the COPA pointed out that the Department of Animal Production and Health should maintain accurate and clear data.

Moreover, the Committee emphasized the importance of actively maintaining the data system by updating the existing data.

This was discussed at the COPA meeting held recently (11) under the Chairmanship of Lasantha Alagiyawanna, to consider the progress of the recommendations given to the Department of Animal Production and Health on July 06, 2023 by the Committee on Public Accounts.

Milk received by Milco, decreased
Mahinda Amaraweera, the Minister in charge of Agriculture, was also involved for this at the invitation of the Committee. The Committee discussed at length the need for local milk in this country and the Minister thus pointed out that the amount of milk received by the Milco company on a daily basis has greatly decreased.

Furthermore, attention was also paid to the preparation of the national policy related to milk production, which was discussed in the previous Committee meeting, and the officials present pointed out that this national policy has now been prepared and it has been forwarded to the Cabinet for approval.

104 imported goats dead

Moreover, the Committee drew attention regarding the death of 104 goats imported from Australia in Embuldanda and Thelahera goat breeding centers. As this was discussed at the last Committee meeting, it was necessary to inquire about the progress of releasing these goats into the field. Thus, the officials pointed out that within a month these remaining animals are ready to be released into the field. The Committee Chair also recommended that a report be given to the Committee in this regard.

The implementation of the artificial insemination programme was focused on at length.

State Minister Diana Gamage, Members of Parliament Tissa Attanayake, A.L.M. Athaullah, Ashok Abeysinghe, and Weerasumana Weerasinghe were present at the Committee meeting held.