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Sri Lanka failed 2 IMF commitments & met 25 by end-April

An IMF Programme usually has four main types of commitments:

a) Prior Actions - These are steps a country agrees to take before the IMF approves financing or completes a review.

b) Structural Benchmarks - These are reform measures that often cannot be quantified but are critical for achieving program goals and used as markers to assess program implementation.

c) Quantitative performance criteria (QPCs) - These are specific, measurable conditions for IMF lending that always relate to macroeconomic variables under the control of country authorities. Such variables include monetary and credit aggregates, international reserves, fiscal balances, and external borrowing.

d) Indicative Targets (ITs) - Indicative targets, which are flexible numerical trackers, may be set for quantitative indicators to help monitor progress in meeting a program’s objectives. Heightened uncertainty and limited capacity may justify greater use of indicative targets under certain circumstances. As uncertainty is reduced, these targets may become QPCs, with appropriate modifications.

By the end April 2023, Sri Lanka had fulfilled 25% of its trackable commitments under the IMF program. Two critical commitments, however, remains unfulfilled. There appears to be three major issues affecting the progress of this commitment:

Firstly, there is a significant lack of information available. Specifically, as of the end of March, the progress status of 10% of the identified commitments was marked as "unknown" on the tracker due to insufficient information being available for assessment.

Sri Lanka has fallen short on two commitments that were expected to be fulfilled by April 2023. The first of these is related to the increase in betting and gaming levies. The amendment to increase the levies were made public on April 4, 2023. However, the amendment has yet to be debated in parliament, indicating a delay in the process. The second failed commitment pertains to gaining parliamentary approval on the central bank bill. Like the betting and gaming amendment bill, this bill was also made public on March 7, 2023 but is yet to be debated and approved by parliament. 

Sri Lanka has partly met one of its governance commitments on establishing an online transparency platform, which was due by March 31st. The platform is intended to provide semi-annual publication of information on (i) significant public procurement contracts, (ii) a list of firms receiving tax exemptions through the Board of Investment, and (iii) a list of individuals and firms receiving tax exemptions on luxury vehicle imports. Information relating to (ii) and (iii) has been published on the Ministry of Finance website in April, but the online transparency platform has not been created. 

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