Sri Lankan officials are betting on a turnaround in the economy and a VAT hike to meet the country's revenue targets for next year.
The country's economy has been contracting, with a 7.8% drop in 2022 and a 7.9% decline in the first half of 2023.
However, Sri Lanka's Central Bank and Treasury, along with multilateral agencies, are anticipating a positive growth turnaround next year.
Speaking at a post-budget forum, Secretary to the Treasury Mahinda Siriwardana said the government's focus for the 2024 budget is on shifting from stabilisation to a growth-oriented approach.
The budget projects to generate an incremental Rs.1,224 billion from taxes, with Rs.859 billion coming from a VAT rate hike and the removal of exemptions.
Deshal de Mel, advisor to the Finance Ministry, expects the increased VAT rate and removed exemptions to generate most of the revenue, with import-related taxes further strengthening the state's coffers.
The government also anticipates a further acceleration of the current economic recovery leading to increased revenues.
