Sri Lanka to table IMF loan papers in parliament

July 31, 2009 (LBO) – Sri Lanka’s government will table in parliament all documents related to a 2.6 billion dollar loan from the International Monetary Fund, junior finance minister Ranjith Siyambalapitiya said. The government also intends to make savings on defence spending, which has sharply reduced after security forces defeated the Tamil Tiger separatists in May.

Under the IMF deal the government is committed to bringing down the budget deficit.

“Defence spending can be reduce in the next few years – we can make a huge saving on ammunition expenditure,” Siyambalapitiya said.

The government also hopes to raise revenue by cutting down on tax holidays given during the war yeas to attract foreign and local investors.

“We have given tax holidays for up to 15-20 years sometimes. Whether we are getting an adequate return from these tax breaks is questionable,” he said.

But critics point out that the government had recently brought a law to help badly managed state enterprises avoid paying past due taxes. Minister’s and state workers salaries are also exempt from income taxes. Sri Lanka has more than a 100 ministers and a bloated public sector.

Most state enterprises run massive losses