Government to seek IMF approval for public spending

COLOMBO (News 1st) - The Sunday Times reported today (December 30) that the government wants flexibility in spending ahead of polls. The government is to renegotiate certain components of the reform programme with the International Monetary Fund (IMF). The paper reported that the negotiations are to allow for more public spending in the run-up to the next election. The paper quotes the finance minister saying "We will, of course, want a certain amount of flexibility in spending." IMF Loans are conditional to a country agreeing to implement policy reforms that require strict financial discipline or fiscal consolidation, to reduce budget deficits and accumulation of debt stock. When taking a look at the key economic indicators of the country, though there is an increase in the inflows of FDI's in the recent past, Sri Lanka is short of about USD 700 Million to reach the target it has set for itself for the financial year 2018. The government is continuously urging investors to start the businesses in Sri Lanka despite being unable to provide tax incentives. While Sri Lanka is reeling from the economic damages of political instability in the country, and are struggling to reach its FDI target, our neighbouring country India, for the first time in two decades India has been getting more investment than China. During the year India saw more than 38 Billion USD of FDIs compared with China's 32 Billion USD. Amidst all of this, the irresponsible nature of how the subject ministers in charge of attracting FDI's into the country acted in the past, is further highlighted by the recent statement of Minister Malik Samarawickreme in parliament regarding the Singapore Sri Lanka FTA.