Tax Reforms Propel Sri Lanka's Economy Towards 12% GDP Growth - Semasinghe

COLOMBO (News 1st); Sri Lanka's State Minister For Finance Shehan Semasinghe emphasized said that his government's success in gradually increasing tax revenues following comprehensive reforms, addresses one of the key issues.

He said key measures included the removal of tax exemptions, strengthening tax compliance, and advancing digitization efforts—a long-pursued goal that has started yielded results.

Tax revenues and government revenues have surged to 11% of the GDP in 2023 from a previous 8.1%, with expectations to further rise to 12% in 2024.

"The tax revenues, and the government revenues have gone up to 11% of the GDP in 2023. That is from 8.1% of the government revenue. In 2024, we expect the numbers to move to 12%. We are confident that we will reach that figure," he said during an interview hosted by the IMF.

The minister underscored the government's commitment to digitize the tax structure, with a notable 130% growth in tax compliance and registration. 

However, Minister Semasinghe stressed the importance of ensuring all eligible citizens contribute to tax revenue, reaffirming the removal of exemptions and stringent measures to prevent revenue leakages.

Transitioning to the nation's debt crisis, Minister Semasinghe acknowledged its role in the economic downturn and highlighted ongoing efforts to address it. 

With the support of the International Monetary Fund (IMF) program, Sri Lanka has made significant progress in negotiations with bilateral creditors, having reached agreements in principle and working towards formalizing Memorandums of Understanding (MoUs).

Notably, a special official creditor committee, co-chaired by Japan, France, and India, facilitated agreements with bilateral creditors, while engagements with commercial creditors and private bondholders continue. 

"We are now working on converting it to MoUs. We had a special official creditor committee which was co-chaired by Japan, France, and India. China sitting outside the Official Creditor Committee, but we are happy that we reached agreements in principle with all our bilateral creditors. We are having engagement with commercial creditors, and the private bondholders," said Semasinghe.

State Minister Semasinghe expressed confidence in reaching a resolution that ensures Sri Lanka's debt sustainability, paving the way for economic stability and growth.