{
  "title": "IMF Staff Concludes Visit to Sri Lanka to Discuss Progress of Economic Program",
  "publication": "IMF News, September 23, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2016/09/23/pr16422",
  "canonical": "https://www.imf.org/en/news/articles/2016/09/23/pr16422",
  "overlayPath": "/en/news/articles/2016/09/23/pr16422/index.md",
  "summary": "A staff team from the International Monetary Fund (IMF) led by Jaewoo Lee visited Colombo during September 13-23, 2016.",
  "publishDate": "2016-09-23",
  "sections": [
    {
      "heading": "Mission timeline and purpose",
      "content": "- A staff team from the International Monetary Fund (IMF) led by Jaewoo Lee visited Colombo during September 13-23, 2016.\n- Purpose: to hold discussions on the first review of the Sri Lankan authorities’ economic program supported by a three-year Extended Fund Facility (EFF).\n- Statement reflects preliminary findings of the mission; staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision."
    },
    {
      "heading": "Macroeconomic assessment (first half of 2016)",
      "content": "- Overall performance reflected:\n  - improving balance of payments,\n  - reduced growth mainly related to recent floods,\n  - slightly higher inflation.\n- The mission welcomes:\n  - effective tightening of fiscal and monetary policies that contributed to improving market confidence and easing pressures on external balances.\n- All quantitative targets through end-June were met."
    },
    {
      "heading": "Fiscal and tax policy findings and recommendations",
      "content": "- Forward-looking aspects of the program review, mainly related to the implementation of the tax reform package, need to be addressed without further delay.\n- Specific recommendations:\n  - Expedite the legislative process of implementing the value added tax (VAT) amendments needed to support revenue targets for 2016 and 2017.\n  - Ensure the 2017 budget is underpinned by a well-crafted and high-quality tax policy strategy to raise Sri Lanka’s low tax revenue-to-GDP ratio.\n  - Commence the legislative process for the new Inland Revenue Act to:\n    - rebalance the tax system toward a more predictable, efficient and equitable structure,\n    - generate needed resources in support of the country’s social and development objectives."
    },
    {
      "heading": "Monetary policy and external sector recommendations",
      "content": "- The mission welcomes the Central Bank of Sri Lanka’s (CBSL) move to preemptively raise policy rates to maintain inflation within its target band.\n- Recommendations for the CBSL:\n  - Remain vigilant in monitoring inflation pressures and stand ready to tighten further should inflation or credit growth continue to rise.\n  - Continue efforts to rebuild international reserves in light of easing external pressures.\n  - Maintain exchange rate flexibility to further develop the foreign exchange market.\n  - Consider plans for a transition to flexible inflation targeting as the monetary policy framework, possibly supported by IMF technical assistance."
    },
    {
      "heading": "Structural reforms and medium-term growth policies",
      "content": "- Encourage concerted efforts to implement structural reforms in:\n  - public financial management,\n  - state owned enterprises,\n  building on substantial technical assistance received over the years.\n- Policy priorities to achieve medium-term macroeconomic objectives:\n  - Renewed effort toward greater integration into regional and global supply chains.\n  - Achieve higher levels of foreign direct investment (FDI).\n  - Enhance prospects for private sector investment.\n  - Bolster competitiveness to boost trade and private sector development and support growth potential."
    },
    {
      "heading": "Meetings and engagements",
      "content": "- The mission met with:\n  - His Excellency President Sirisena,\n  - Prime Minister Wickremesinghe,\n  - Finance Minister Karunanayake,\n  - Governor of the Central Bank of Sri Lanka Coomaraswamy,\n  - parliamentarians, other public officials, and representatives of the business community, civil society and international partners.\n- Discussions on reaching a staff level agreement on completion of the first review will continue in October in Washington D.C. during the Annual Meetings of the IMF and World Bank.\n\nIMF Communications Department — Press Release No. 16/422, September 23, 2016\n\n---\n\n\n References\n\n- Sri Lanka and the IMF\n- Press Releases\n- PRESS CENTER\n- a three-year Extended Fund Facility (EFF)\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2016/09/23/pr16422"
    }
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    "Published: September 23, 2016",
    "A staff team from the International Monetary Fund (IMF) led by Jaewoo Lee visited Colombo during September 13-23, 2016.",
    "Purpose: to hold discussions on the first review of the Sri Lankan authorities’ economic program supported by a three-year Extended Fund Facility (EFF).",
    "Statement reflects preliminary findings of the mission; staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.",
    "Overall performance reflected:",
    "The mission welcomes:",
    "All quantitative targets through end-June were met.",
    "Forward-looking aspects of the program review, mainly related to the implementation of the tax reform package, need to be addressed without further delay.",
    "Specific recommendations:",
    "The mission welcomes the Central Bank of Sri Lanka’s (CBSL) move to preemptively raise policy rates to maintain inflation within its target band.",
    "Recommendations for the CBSL:",
    "Encourage concerted efforts to implement structural reforms in:",
    "Policy priorities to achieve medium-term macroeconomic objectives:",
    "The mission met with:",
    "Discussions on reaching a staff level agreement on completion of the first review will continue in October in Washington D.C. during the Annual Meetings of the IMF and World Bank.",
    "[Sri Lanka and the IMF](http://www.imf.org/external/country/LKA/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[a three-year Extended Fund Facility (EFF)](http://www.imf.org/external/np/sec/pr/2016/pr16262.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
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