IMF mission says delay in VAT law may postpone review

Sept 23, 2016 (LBO) – The IMF mission currently in Sri Lanka says they may have to postpone their review a bit if the proposed VAT legislation will get delayed in Parliament.

The mission head Jaewoo Lee however told reporters in Colombo that it will not be necessary under the current environment.

“On the submission of VAT to Parliament, if it does not happen in a timely manner we might have to postpone the review a little,” Lee said.

“But that will not be necessary.”

Lee expects Sri Lanka’s growth rate to be around 5 percent in broad terms next year.

The mission commended the authorities for implementing their IMF-supported economic program under difficult circumstances, with all quantitative targets through end-June being met.

However, some forward looking aspects of the program review, mainly related to the implementation of the tax reform package, need to be addressed without further delay, the mission said.

The mission welcomed the Central Bank’s move to preemptively raise policy rates to maintain inflation within its target band.

“The mission and the authorities discussed plans for a transition to flexible inflation targeting as the monetary policy framework, possibly supported by IMF technical assistance,”

“Discussions will continue in October in Washington D.C. during the Annual Meetings of the IMF and World Bank.”

The staff team from the International Monetary Fund visited Colombo during September 13-23, 2016 to hold discussions on the first review of the Sri Lankan authorities’ economic program that is being supported by a three-year Extended Fund Facility.

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