By Kelum Bandara

The main opposition UNP said yesterday it would be practically impossible for the government to fulfil conditions agreed to with the International Monetary Fund for the receipt of the massive US $ 2.6 billion loan which was to be released in a number of instalments.

UNP front-liner Ravi Karunanayake told a news conference one of the condition agreed to was that the Ceylon Petroleum Corporation and the Ceylon Electricity Board currently running at a colossal loss should be turned around and by 2011 be converted into profit-making ventures.

He said this could be achieved by either increasing the electricity rates or by privatizing at least some of the subsidiaries of the CEB.

He said according to the Memorandum of Economic and Financial Polices the Sri Lankan government was called upon to reduce the budget deficit from the present nine per cent to five per cent by 2011 while increasing its tax revenue by two per cent.

Mr. Karunanayake said the government was also required to contain the overall deficit at seven per cent of the Gross Domestic Product (GDP) and in this exercise it was essential for key state-owned enterprises to improve their performance.

“The government should inform the people how these targets will be achieved. If it is by increasing tax revenue, the government has to increase levies on essential items further burdening the ordinary masses. We fear the possibility of the electricity tariffs being increased by at least by 150 per cent to fulfil IMF requirements,” Mr. Karunanayake said.

However he said the UNP had right along requested the government to approach the IMF for loans rather than turning to private banks for loans at higher rates of interest and pointed out that the IMF loan should be used only to strengthen Sri Lanka’s foreign reserves and for servicing debts.

“The government has already imposed a tax of Rs.32 on a litre of petrol; Rs.85 on a kilo of milk powder and Rs.396 on a 12.5 kg cylinder of gas. Though the milk powder prices in the world market has come down the government is still delaying to pass on the benefit to people,” Mr. Karunanayake said.

He admitted that the IMF standby facility would help the rupee to appreciate against the dollar.