Sri Lanka meets 38 of the 57 IMF commitments but long way to go
By: Staff Writer
Colombo (LNW): Sri Lanka is undergoing the international monitory fund prescribed economic reform program to rescue the country’s almost dying economy fulfilling 38 commitments made to gain US $2.9 billion extended fund facility under the first IMF policy review.
Sri Lanka verifiably met 38 of the 57 trackable commitments that were due for completion by end-August in its 17th programme with the International Monetary Fund (IMF), according to the latest progress update by Verité Research.
The end-August update on the programme by ‘IMF Tracker’, an online platform by Verité Research, shows that the progress on 11 commitments remains “unknown”, while eight are now classified as “not met”.
IMF staff team now in Sri Lanka is reviewing the progress on the programme which kicked off in March 2023 and approve the second disbursement – which is now expected to be delayed till at least the end of October.
The IMF review is to focus on commitments that were due by the end of June. Even with that large latitude, Sri Lanka is falling short on an important governance-linked commitment.
That is, the establishment of an online fiscal transparency platform. This was due by end-March but is yet to be delivered.
This platform was expected to publish semi-annually three types of information: (1) all significant public procurement contracts, (2) a list of all firms receiving tax exemptions through the Board of Investment, and (3) a list of individuals and firms receiving tax exemptions on luxury vehicle imports.
Such a platform can shed light on government actions and curtail the abuse of power to confer private advantage, at the cost of public revenue.
This is also the first Sri Lanka programme in which the IMF has identified governance and corruption issues as being critical for macro-economic recovery and stability in Sri Lanka. The fiscal transparency platform gains added importance in that light.
The IMF has a track record of overlooking failures to meet commitments, especially when they occur due to circumstances that might be outside the control of government.
This act of omission, however, is one that is well within the government’s control. Overlooking it can make the IMF appear to not be giving due weight to its own evaluation about the importance of governance related commitments – and encourage further slippage in future actions related to improving governance in Sri Lanka.
However “IMF welcomes the authorities’ ongoing efforts in meeting key commitments under the Fund-supported program.
Performance under the program will be formally assessed in the context of the first review of the Extended Fund Facility arrangement, which is nowtaking place sources said.
It is yet to be submitted the Public Financial Management (PFM) Law to Parliament for approval and the full revision of the Banking Act approval during Q3 and Q4 -2023.