Sri Lanka had met 29 of the 100 trackable commitments of the International Monetary Fund (IMF) programme and had failed on three as of the end of May 2023, according to ‘The IMF Tracker’ dashboard of Verité Research.
Two of the failed commitments relate to revenue. The first is to increase tax revenue to 2.1 per cent of Gross Domestic Product (GDP), or Rs. 650 billion, by March 2023. Total government tax revenue was only Rs. 578 billion in the first quarter of 2023.
The second commitment is to increase the tax rates pertaining to the Betting and Gaming Levy in line with aMay 30 tax proposal. This involves increasing the annual levy on gaming to LKR 500 million, the annual levy on betting carried through agents to Rs. 5 million, the annual levy on betting carried using live telecasting to Rs. 1 million, the annual levy on betting carried without live telecasting to Rs. 75,000 and the levy on gross collection to 15%. A bill was published on the 4th of April but an amendment to the act has not been made.
One commitment, the establishment of an online fiscal transparency platform, was partially met by end-May. This platform is expected to publish, on a semi-annual basis, information related to (i) all significant public procurement contracts, (ii) a list of all firms receiving tax exemptions through the Board of Investment, and (iii) a list of individuals and firms receiving tax exemptions on luxury vehicle imports.
The third unmet commitment was parliamentary approval of the new Central Bank Act, prepared in consultation with IMF staff. Even though a bill was published on 7 March, an amendment to the act has not been made.
Six of the identified commitments had their progress status in the tracker classified as unknown as of end-May. This means the information required to make an assessment was not available. While this is an improvement on March and April, the lack of information is still a concern.
Verité Research notes that timely progress on the IMF programme has two benefits. First, there are the material benefits that can result from many (not all) of the actions. Second, it can improve confidence in Sri Lanka’s governance, which then helps negotiations to restructure the burden of past debt and speed up the path to future economic recovery.
‘The IMF Tracker’ is the first and only platform in Sri Lanka which tracks 100 identified commitments recorded along with Sri Lanka’s letter of intent to the IMF on the programme approved on 20 March 2023. The platform is designed to assist the government and people of Sri Lanka, as well as the IMF, to better understand and track the progress made on these commitments.
The tool is available for the public at manthri.lk/en/imf_tracker