The International Monetary Fund (IMF) has informed the Sri Lankan government that it must generate Rs. 900 billion in revenue before the release of the fifth tranche under the Extended Fund Facility (EFF) program. The IMF also emphasized the need for increased investment and economic reforms to ensure long-term financial stability.
Kenji Okamura, Deputy Managing Director of the IMF, warned that Sri Lanka cannot afford policy mistakes as economic risks persist. He stressed that sustaining the reform agenda is crucial for the country’s economic recovery and debt sustainability.
The IMF outlined key measures that the government must prioritize, including improving tax compliance, avoiding tax exemptions, and restoring cost-recovery electricity pricing without delay. These steps are seen as essential to reducing financial risks associated with state-owned enterprises.
Additionally, the IMF clarified that it is not possible to eliminate the 15% tax on services provided by Sri Lankan citizens to foreign entities, reaffirming the government’s obligation to maintain the tax structure.
Sri Lanka is expected to receive twoa IMF loan tranches worth $1.1 billion this year, but their release remains conditional on the government’s progress in achieving the required fiscal and economic targets.
