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IMF Board Approves Latest Tranche Under SBA

Sep 24, 2010 10:34:27 PM - thesundayleader.lk

The International Monetary Fund (IMF) says that fundamental tax reform, including reform of the investment promotion regime, is central to achieving the government’s budget deficit reduction targets while creating the fiscal space for much-needed reconstruction and infrastructure investment, as well as social spending.

The IMF Executive Board notes that the 2011 budget will be key to demonstrate the government’s continued commitment to the program’s goals.

However, IMF Executive Board after completing the 2010 Article IV Consultation and Fourth Review under the Stand-By Arrangement (SBA) has approved the latest tranche.

Sri Lanka will receive another $210 million under the SBA on Monday after IMF Executive Board approval the latest disbursement.
An IMF team was in Colombo a few weeks back for the review assessment.

Following the Executive Board’s discussion on Sri Lanka, Deputy Managing Director and Acting Chair, Murilo Portugal stated:

“Sri Lanka’s performance under the program has been satisfactory. Overall economic conditions are improving, and the economy is likely to show strong growth this year on the back of improved fundamentals and political stability. Sustaining high, socially inclusive growth will require substantially higher levels of private investment, underpinned by broad-based structural and financial sector reforms.

“The current favorable environment allows the authorities to focus on addressing the many challenges that remain, particularly in the fiscal and financial sectors. Policies will be geared toward preserving macroeconomic stability, ensuring external competitiveness, facilitating capital market development, and improving the investment climate.

“Fundamental tax reform, including reform of the investment promotion regime, is central to achieving the government’s budget deficit reduction targets while creating the fiscal space for much-needed reconstruction and infrastructure investment, as well as social spending. In this regard, the 2011 budget will be key to demonstrate the government’s continued commitment to the program’s goals.

“Further improvements in monetary policy formulation will provide useful support for macroeconomic stability. The central bank is now in a position to move gradually toward a flexible framework that targets inflation more directly. The recent introduction of more exchange rate flexibility will support such a transition while also helping to maintain competitiveness.

“The government’s financial sector reform agenda is on track. Further reforms include putting in place a deposit insurance system, establishing a regulatory framework for private sector pensions, and deepening capital markets, which will facilitate private investment.”