International Monetary Fund (IMF) Mission Chief for Sri Lanka, Manuela Goretti, has urged Sri Lanka to exercise prudence and fiscal discipline in the lead up to Sri Lanka’s presidential election as well as structural reforms.
During an interview Manuela Goretti told reporters;
“Our advice remains prudent policies along with fiscal discipline and vigilant monetary policy to shore up market confidence. It is important to strengthen Sri Lanka’s resilience to internal and external shocks, given the country’s remaining vulnerabilities”
Goretti has also warned that Sri Lanka is in a particularly vulnerable situation with a high level of public debt and “relatively low buffer”. She also maintained that the IMF has an Extended Fund Facility (EFF) program which offers $1.5 billion in terms of funding and was willing to engage Sri Lanka.
During her interview, she stated that Sri Lanka has a unique opportunity and will be more likely to achieve “more reforms, at a lower cost, in the first two years of a government”.
The IMF has encouraged Sri Lanka to prioritise macro-economic reforms to help stabilise markets and has maintained that well-targeted social protection initiatives may protect vulnerable communities in the country.
Goretti has further called for trade liberalisation; restructuring Sri Lanka’s energy section; and, a revise the tax system to crackdown on tax evasion and strengthen tax collection.
During the interview she stated;
“Stepping up trade liberalisation is priority. This will need to go hand in hand with tax reforms to ensure there is no revenue erosion [...] The other priority is governance reforms and stepping up anti-corruption efforts. Governance reforms include State sector enterprise restructuring especially in the energy/electricity sector. This must be addressed after the Elections”.
Commenting on the decline of Sri Lanka’s tourism due to the deadly Easter Sunday bombings, she has claimed that the IMF believes “the tourism sector will normalise by early next year”.
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