Former Deputy Governor of the Central Bank of Sri Lanka (CBSL) Dr.
W.A.
Wijewardena is of the view that the federal government is constrained by its agreement with the International Monetary Fund (IMF) and the criteria set by the Economic Transformation Act, making it challenging to achieve the targeted income of 15.1% of GDP this year.He revealed that the government must introduce brand-new taxes to accomplish the profits targets set for the year in order to not lose the fourth tranche of the International Monetary Funds (IMF) Extended Fund Facility (EFF) program.The federal government of President Anura Kumara Dissanayake has been constrained in its monetary policy formulation by 2 elements which have actually been beyond its control.
One is the loan arrangement signed by the previous federal government with the IMF which President Dissanayake has agreed to implement with no amendment, Dr.
Wijewardena said.The second one is the economic transformation act that was gone by the Parliament just before the new President was chosen where in which the federal government has numerous standards to meet in regards to the law when they prepare its budget for the 2025.
Among the requirements under the IMF as well as the economic change act is that Sri Lanka should attain profits of the federal government amounting to 15.1% of the GDP for 2025, which comes to about Rs.
5.5 trillion.
That is an enormous target for the federal government, he added.Without having actually new taxes introduced on individuals, there is no possibility for the government to reach this level.
If the federal government is not able to reach this level the 4th tranche of the IMF will not be provided to Sri Lanka.
It will also be non-compliant with the economic improvement act.In addition to that, there had been particular controversial taxes that had actually been proposed by the previous government to IMF one is the real estate tax.
Now this tax has actually been deserted by the present government and as an outcome it will need to introduce a brand-new tax to raise the same income since of the earnings loss, Dr.
Wijewardena expressed.Because of these factors the budget can not deliver that much of arrangements to individuals as it has to confine its budgetary policy within the IMF as well as the prescribed limits of theeconomic change act, said the ex-Deputy Governor of the CBSL.