President tables IMF agreement in Parliament

(LANKAPUVATH | COLOMBO) –  President Ranil Wickremesinghe officially informed the Parliament today about the USD 3 billion Extended Fund Facility (EFF) Sri Lanka received from the International Monetary Fund (IMF) and tabled the document on the agreement reached with the global lender.

Delivering a special statement in parliament, the President said the receipt of the IMF facility is a step towards building a better future for the youth and uplifting the country.

The credit facility amounts to approximately USD 3 billion over four years, with the first tranche of USD 333 million received. Additionally, the country is expecting about USD 7 billion more in rapid credit support from other parties, he said.

Noting that he took over a country that was burning, the President said there are some people who define the International Monetary Fund credit facility as another loan with high interest to gain political advantage.

“Some people consider the IMF EFF as just another loan, while others claim that the total debt of the country cannot be paid off with the amount received.”

President Wickremesinghe noted that these statements show either ignorance or a willingness to betray the country for political gain.

The President emphasized that the IMF facility is not a loan given at burning interest but a credit facility given to rebuild a fallen country.

President Wickremesinghe told Parliament that the IMF EFF 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 said.

“We are now starting a new journey. We have to introduce many economic reforms throughout the process. The foundation for our success will be through this path,” the President said adding that some of these reforms have already been proposed and implemented through the interim budget of 2022 and the budget for 2023.

He said the government will introduce numerous other reforms,”

The government aims to reduce the primary deficit to2.3% of GDP by 2025 and increase revenue to 14% of GDP by 2026.

The standard corporate income tax rate has been raised to 30%, and sectoral tax holidays have been eliminated.

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

The President told the Parliament that the government plans to reduce existing tax exemptions on VAT by 2024, remove the simplified VAT system, and expedite its reimbursement.

Estate Duty will be introduced as a property tax by 2025, with a minimum tax exemption allowance.

President Wickremesinghe said the government aims to reduce the inflation rate to 4-6% and bring it to a single digit by mid-2023.

“We plan to reduce the budget deficit and refrain from printing money. The forex market {thresholds and guidelines will be relaxed while allowing market criteria to determine its activities. The Central Bank plans to purchase foreign currency to build up foreign reserves.”

“In the next 10 years, all the loans taken so far should be paid off. I am sure that if we continue on this path, we can achieve that situation. If we follow this path, we can make Sri Lanka a developed country in the world in 2048,” the President said

“Let’s speed up the difficult journey. Our primary goal is to build the country. If we think like that, we can go faster and more successfully.”

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. “Their commitment was a great strength in achieving the IMF Facility,” the President said extending his gratitude to the people of this country.

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