IMF asks Lanka to expedite implementation of VAT amendments

Colombo, (PTI) The IMF today asked the Sri Lankan government to expedite the legislative process of implementing the VAT amendments to meet obligations under the three year extended fund facility (EFF) by the global lender.

"It is important that the government expedites the legislative process of implementing the VAT amendments that are needed to support revenue targets for 2016 and 2017", Jaewoo Lee, the head of the IMF mission, which concluded a 10-day visit tot the country told reporters.

The government's increased VAT proposals met with resistance from the unity government partner, Sri Lanka Freedom Party of the President Maithripala Sirisena.

The opposition and businesses also took to the streets to oppose the move.

The move to affect a 4 per cent increase from 11 to 15 per cent which was to come into force in May this year had to be shelved as the Supreme Court ruled that the law had not been presented in parliament with due procedure being followed.

The IMF mission refuted the government's claim that the VAT hike was a temporary measure. 

"It will be a source to support revenue targets and we do not see it as a temporary measure," Lee said.   

In June the IMF approved a 1.5 billion dollar extended finance facility for 3 years to support the balance of payments and in support of the government's reform agenda.