The International Monetary Fund (IMF) emphasized the urgent necessity for Sri Lanka to restore fiscal and debt sustainability to overcome its ongoing economic crisis.
Julie Kozack, Director of the IMF’s Communications Department, underscored the importance of these measures in response to a question posed by News 1st’s Zulfick Farzan, highlighting the complex policy trade-offs the country faces.
“Regarding salaries and the program protecting the poor, it is crucial to understand the difficult situation in Sri Lanka over the past few years. The country continues to face complex policy trade-offs, particularly concerning debt and the fiscal position. Both remain in challenging territory,” Kozack stated.
She further elaborated that restoring fiscal and debt sustainability is essential not only for the Sri Lankan economy to emerge from its current crisis but also to prevent a recurrence of the severe economic conditions faced in 2022. “These measures are also crucial to laying the foundation for robust and sustainable growth and job creation,” she added.
Addressing the government’s need for resources to meet its financial obligations, Kozack stressed the importance of an equitable tax system.
“The government needs resources to pay its bills. This means ensuring that taxes are paid by those who can most afford to pay them, which is a key priority in Sri Lanka. Efforts in this direction include improving tax administration and limiting the size of tax exemptions granted in the past,” she explained.
Kozack also emphasized that the IMF’s program for Sri Lanka includes measures to protect the poor and vulnerable. “The program includes measures to protect the poor and vulnerable. It has a strong focus on anti-corruption and good governance, to mitigate the impact of reforms on vulnerable segments of society and ensure that the hard-won gains from the reform efforts ultimately benefit all the people of Sri Lanka,” she concluded.
