Ranjith Siyambalapitiya

State Minister Siyambalapitiya cherry picks to cheer fiscal stability


…we are coming step by step towards fiscal stability. Even the IMF calculated that for this first quarter, our primary account balance will be negative by Rs. 56 billion. But we have brought this quarter…to a positive Rs. 48 billion.

Parliament of Sri Lanka - Parliament Live - On-demand | May 25, 2023


Partly True

Fact Check

The state minister’s overall claim is that Sri Lanka is making steady progress towards achieving fiscal stability. To support this claim, the state minister points out that Sri Lanka has achieved a primary balance of positive LKR 48 billion, against the IMF program projection of negative LKR 56 billion for the first quarter of 2023. The primary balance is the difference between revenue and expenditure (excluding interest payments).

To check his overall claim on fiscal stability, FactCheck.lk consulted the 2022 Ministry of Finance Annual Report (MoFAR), the IMF Staff Report (IMFSR), and the IMF tracker managed by Verité Research  (see https://manthri.lk/en/imf_tracker).

MoFAR records that Sri Lanka’s primary balance for the first quarter of 2023 was a positive balance of LKR 48.3 billion, surpassing the IMF’s projection of negative LKR 56 billion, as claimed by the state minister.

However, the state minister has cherry-picked one narrow indicator of fiscal performance, without considering other important indicators such as revenue, and interest cost (see Additional Note 1 for further information). The IMF set out targets for 1) tax revenue collected by the end of the first quarter of 2023, set at LKR 650 billion, and 2) an effective interest rate of 7.2% for the year 2023, which includes unpaid interest for bilateral and commercial debt. Based on FactCheck.lk’s calculations on the available data, the expected paid-out interest cost for the first quarter of 2023 amounts to less than LKR 500 billion. (See Additional Note 2 for more information on FactCheck.lk’s calculation).

The government fell short of the IMF’s tax revenue target of LKR 650 billion, by collecting only LKR 578 billion (MoFAR). The paid-out interest costs for the same period, amounted to LKR 673.1 billion, significantly exceeding the expected interest cost of under LKR 500 billion.

While the state minister is correct in stating that Sri Lanka has overperformed on the primary balance target for the first quarter of 2023, Sri Lanka has fallen short of other IMF critical indicators related to fiscal stability. The broader claim on fiscal stability is not supported by the achievement of just one indicator of fiscal performance.

Therefore, we classify the state minister’s statement as Partly True.

*FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment.

Additional note 1:

These indicators are crucial for assessing fiscal stability for the following reasons:

(1) Government Revenue: Achieving the tax revenue target demonstrates the effectiveness of proposed taxation policies and the ability of the government for achieving fiscal consolidation and debt sustainability.

(2) Interest Cost: Although interest costs are not factored into the primary balance, they significantly impact the ability of the government for achieving fiscal consolidation and debt sustainability.

Additional note 2:

FactCheck.lk has calculated the IMF’s estimated effective interest cost for the first quarter of 2023. The IMF’s projected effective interest rate of 7.2% for the year 2023 includes both domestic interest payments and total external interest payments. The reported LKR 673.1 billion in interest cost consists only of paid-up interest, which is on domestic debt and external debt owed to multilateral lenders. The exclusion of interest payments for external financial markets and bilateral lenders is due to the suspension of debt service payments for these creditors since 12 April 2022. As such, the total estimated yearly interest payment for 2023 is LKR 2,007 billion. The estimation is based on the IMF’s projection of 7.2% of the total outstanding central government debt and arrears as of end 2022. This estimate was adjusted to exclude the expected interest payment component for external financial markets and bilateral lenders. By dividing the resulting interest payment excluding the interest component for external financial markets and bilateral lenders (LKR 1,802 billion) by four, the quarterly expected interest payment figure of less than LKR 500 billion is obtained.


Ministry of Finance Annual Report 2022: https://www.treasury.gov.lk/api/file/0a9e89e6-1b9a-497d-bde2-9c7965b4bf81

Ministry of Finance Public Debt Summary 2022: https://www.treasury.gov.lk/api/file/a969a81b-13d9-4337-a5b7-858d31eb3715#:~:text=As%20at%20end%202022%2C%20Sri,and%20USD%203.1bn%2C%20respectively.

International Monetary Fund, “Sri Lanka: Request for an Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; and Statement by the Executive Director for Sri Lanka”, 20 March 2023: https://www.imf.org/en/Publications/CR/Issues/2023/03/20/Sri-Lanka-Request-for-an-Extended-Arrangement-Under-the-Extended-Fund-Facility-Press-531191

Central Bank of Sri Lanka Annual Report 2022:  https://www.cbsl.gov.lk/en/publications/economic-and-financial-reports/annual-reports/annual-report-2022

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