In a special address to Parliament today, President Anura Kumara Dissanayake announced a significant agreement reached between the Sri Lankan government and the International Monetary Fund (IMF) during the third review of the country's economic program.
Government Reaches Agreement with IMF on Tax Reforms and Economic Targets
The President revealed that one of the key outcomes of the agreement was the decision to raise the income tax threshold from Rs. 100,000 to Rs. 150,000 per month. This move is expected to ease the tax burden on lower-income earners, benefiting a large portion of the population.
Additionally, Dissanayake outlined the government's ambitious goal of increasing the country’s foreign exchange reserves to USD 15.1 billion by 2028, aiming for stronger economic stability. He expressed confidence that his administration would remain in power through this period, ensuring the achievement of these targets.
The President also disclosed that the government had agreed with the IMF to reduce taxes on service exports, cutting the current rate of 30% to 15%. This reduction is expected to encourage the growth of service exports, particularly in key sectors like IT and tourism, which have faced challenges in recent years.
Furthermore, the government has agreed to increase the Withholding Tax from 5% to 10%, a decision that aligns with fiscal consolidation efforts.
These moves are seen as crucial steps in Sri Lanka’s ongoing efforts to stabilize its economy, attract foreign investments, and meet its international obligations under the IMF-backed economic program.
