COLOMBO, March 22 (Xinhua) -- Sri Lankan President Ranil Wickremesinghe told parliament on Wednesday that the IMF Extended Fund Facility (EFF) will restore Sri Lanka's international recognition, ensure the country is not bankrupt and help banks regain international trust.
He said that 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 3 billion U.S. dollars over four years, with the first tranche of 333 million dollars to be received, he said.
Additionally, the country is expecting about 7 billion dollars more in rapid credit support from other parties, Wickremesinghe told the lawmakers.
The IMF EFF 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 must introduce many economic reforms throughout the process," he said.
Some of these reforms have already been proposed and implemented through the interim budget of 2022 and the budget for 2023, the president said.
He added that the government aims to reduce the primary deficit to 2.3 percent of gross domestic product (GDP) by 2025 and increase revenue to 14 percent of the GDP by 2026.
Wickremesinghe noted the standard corporate income tax rate has been raised to 30 percent, and sectoral tax holidays have been eliminated.
The pay-as-you-earn tax rate has been raised from 12 percent to 15 percent, and the tax exemption limit has been reduced from 300 million rupees (0.85 million dollars) to 80 million rupees (0.22 million dollars), he said.
The president told parliament that the government aims to reduce the inflation rate to 4 percent to 6 percent and bring it to a single digit by mid-2023.
The government also plans 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," he said.
The president said that with regard to good governance, the IMF is preparing a report to assess the governance framework and corruption in Sri Lanka.
The government is drafting laws against corruption in line with UN conventions and will present a new Public Finance Management bill to introduce strong fiscal policies and laws regarding foreign loans.