Introduction of property tax critical to put economy on path – IMF
Sri Lanka’s economic situation is gradually improving and the countries growth have turned positive after six consecutive quarters of contraction, registering 1.6% and 4.5% y-o-y growth in the third and fourth quarters of 2023 respectively said Senior Mission Chief for Sri Lanka, IMF, Peter Breuer, at a special press conference yesterday at the Central Bank.
High-frequency economic indicators point to a continued pick-up in manufacturing, construction, and services. Inflation has come down from a peak of 70 % in September 2022 to 5.9 % in February 2024. Gross official reserves increased to US$4.5 billion at end-February 2024 with sizable foreign exchange purchases by the central bank.
“Sustaining the reform momentum is critical to put the economy on a path towards lasting recovery and stable and inclusive economic growth. We welcome the authorities’ commitment to fiscal reforms. Continued progress towards the introduction of the property tax is critical, together with revenue measures to meet the revenue mobilization goals in 2025 and beyond. Revenue administration and anti-corruption efforts to boost tax collections are also key. Maintaining cost recovery in fuel and electricity pricing will help minimize fiscal risks arising from State-owned enterprises. “The authorities are making good progress in implementing an ambitious reform agenda under the EFF with commendable outcomes, including rapid disinflation, robust reserve accumulation, and initial signs of economic growth while preserving the stability of the financial system. “Public finances have strengthened following substantial fiscal reforms. Program performance was strong, with all quantitative performance criteria and indicative targets for end-December 2023 met except for the indicative target on social spending.”
“Most structural benchmarks due before end-February 2024 were either met or implemented with delay. Reforms in some areas are still ongoing.”
Asked by Daily News Business as to how the disbursement amount was reached for Sri Lanka he said that the country’s economic crisis was ascertained while the other donor funding that was expected for the country was also taken into account.
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