IMF says reforms lagging behind timelines in Sri Lanka

Colombo: The IMF on Tuesday said Sri Lanka should take "decisive" actions to maintain reform momentum after it was found that the country's progress on implementing structural benchmarks were "somewhat uneven".

An International Monetary Fund mission currently in Sri Lanka said though progress has been made to step up revenue collections and automating revenue administration, the net international reserves fell short of the target.

"The progress on implementing structural benchmarks was somewhat uneven with some of the reforms lagging behind intended timelines," it said, adding mission and government officials have discussed "decisive" actions to maintain the reform momentum in light of uncertain external environment.

"To this end, it is important for the government to continue on the revenue-based fiscal consolidation and generate adequate resources to support its social and development objectives while maintaining debt sustainability," said Jaewoo Lee, the mission leader.

According to the IMF mission, Sri Lanka's overall macroeconomic performance in the second half of 2016 was mixed with gradually recovering growth and an uptick in inflation due to the impact of drought and the VAT increase.

But a prolonged drought could raise food and oil imports with adverse impact on growth, inflation, and the balance of payment, Lee added.

The mission encouraged the government to accelerate implementation of structural reforms in public financial management and state-owned enterprises, building on the substantial technical assistance received so far.

The mission said it supports the ongoing work to design reforms in the business environment and competitiveness.

Sri Lankan opposition parties are critical of the mission, they fear of the government yielding too much to the IMF.

Former President Mahinda Rajapaksa has said the government of his successor President Maithripala Sirisena was planning to sell state assets in terms of the agreement with the IMF.