Sri Lanka’s government expenditure is 20 per cent of the gross domestic product, but the Sri Lankan government’s tax revenue last year was 9 per cent and Mr. Peter Brewer, the head of the International Monetary Fund’s Sri Lanka mission, said at the press conference held at the Central Bank of Sri Lanka today (19). Sri Lanka Latest News
Mr. Brewer said that the gap between government expenditure and tax revenue in this country is 11 per cent and no one is willing to give loans to cover such a big gap. Mr Brewer also stated that although the tax revenue of 7 per cent in 2022 has increased to 9 per cent last year, it is not enough.
He said that reducing the gap between government income and expenditure is a challenge that Sri Lanka is facing and that Sri Lanka should successfully overcome that challenge and increase the government’s tax income to 12 per cent this year and 14 per cent next year. Mr. Brewer said that the lenders would come forward. He also said that when someone fails to pay the tax, the same amount will have to be paid to another person. Due to this, people should be prevented from sneaking through the tax loophole, he said.
Mr. Peter Brewer said that the gap between the government’s tax income and expenditure is 13 per cent in 2022 and when there is such a gap, it is not surprising that the government will run out of money. The publication of the tax concessions given through the Sri Lanka Investment Board on a public website. He stated that it is one of the recommendations contained in the declaration and that the suspension of further tax concessions to Sri Lanka is one of the commitments of the aid program.
Mr Brewer also said that the property tax will provide great support in achieving the government’s tax revenue target given by the financial fund program.
Mr. Brewer said that Sri Lanka’s next steps in debt restructuring should be to make the in-principle agreement with the official creditors into an official agreement as soon as possible and to enter into an in-principle agreement with the commercial creditors. Although no specific time has been decided yet, the first review will take 6 months after the approval of the Executive Committee. He stated that the second review will be conducted in principle and by that time it is expected that Sri Lanka will reach an agreement in principle with the commercial creditors.
Mr. Brewer mentioned that even though Sri Lanka reached an agreement in principle with the Chinese Exim Bank, Sri Lanka is still negotiating with the China Development Bank, which was a commercial creditor. Digitization of services is a very important step to reduce corruption and fraud in Sri Lanka and the International Monetary Fund has supported Sri Lanka for that. Mr. Brewer said that he is encouraging.
Mr. Brewer stated that although Sri Lanka’s economy is showing signs of stabilization, the economic recovery is still in the early stages and most of the population has not received its benefits.
Also, the International Monetary Fund predicts that Sri Lanka’s economic growth rate will be 2 per cent this year, Mrs Sarwat Jahan, the Fund’s resident representative in Colombo, said in the press conference.
A group of officials from the International Monetary Fund began an official visit to Sri Lanka on the 11th to today (19) where they engaged in discussions with the Sri Lankan authorities for a week. After approving the first review of Sri Lanka, the group of officials studied the process of implementing economic reforms.