President tables IMF agreement in Parliament

President Ranil Wickremesinghe tabled the IMF staff level agreement on the  Extended Fund Facility (EFF) arrangement for Sri Lanka in Parliament, a short while ago.

President Wickremesinghe is currently in Parliament attending today’s parliamentary proceedings and is delivering a special statement on the IMF Extended Fund Facility.

He said that at a time when the country was in chaos in July last year, no one was willing to accept responsibility and that he was requested to take over. 

“I had no power in Parliament, and no MPs from my Party to call my own.” However, the President said his strength was his conviction that he was capable of rebuilding the country.

He said that the IMF credit facility amounts to USD 3 billion over a period of 4 years, with the first tranche of USD 333 million already being received. 

Additionally, the country is expecting about USD 7 billion dollars more in rapid credit support from other parties, he said.

He said the IMF facility is a step towards building a better future for the youth and uplifting the country. 

The President said the IMF Extended Fund Facility will restore Sri Lanka’s international recognition, ensure the country is not bankrupt and help banks regain international recognition. 

This will create opportunities for low interest credit, restore foreign investors’ confidence and lay the foundation for a strong new economy, he emphasized. 

The President says that the government plans to reduce existing tax exemptions on Value Added Tax (VAT) by 2024, remove the simplified VAT system, and expedite its reimbursement. 

He added that Estate Duty will be introduced as a property tax by 2025.

He also said that the government aims to reduce the primary deficit to 2.3% of the GDP by 2025 and to increase revenue to 14% of GDP by 2026.

He said the standard corporate income tax rate has been raised to 30%, and that sectoral tax holidays have been eliminated. 

The PAYE tax rate has been raised from 12% to 15%, while the tax exemption limit has been reduced from Rs. 300 million to Rs. 80 million.

President Wickremeisnghe stated that fuel prices will be decided only by the 2018 Fuel Price Formula and that the electricity tariff will be adjusted every 06 months.

He urged the Members of the Parliament to approve the agreement reached with the IMF. “Only then can I start the second round of discussions,” he said, addressing the House.  

“This is not the end of the journey. This is the beginning of a longer journey.”

The President said that amidst numerous hardships, bearing all kinds of pressure and undergoing suffering with equanimity, the people of this country remained calm and patient. 

He said their commitment was a great strength in achieving the IMF Facility and therefore, he extended his gratitude to the people of the country. 

The Executive Board of the IMF approved the Extended Fund Facility (EFF) to Sri Lanka at its board meeting held on Monday (20 March).

The program will allow Sri Lanka to access financing of up to US$ 7 billion from the IMF, International Financial Institutions (IFIs) and multilateral organizations.

Meanwhile, 48-month extended arrangement with an amount of SDR 2.286 billion (395 percent of quota or about USD 3 billion) was also approved under the EFF, with the aim of restoring Sri Lanka’s macroeconomic stability and debt sustainability, mitigating the economic impact on the poor and vulnerable, safeguarding financial sector stability, and strengthening governance and growth potential, the IMF said.