The International Monetary Fund has defended the revenue-raising measures imposed under Sri Lanka’s reform programme, saying restoring fiscal sustainability remains essential to long-term recovery, an IMF spokesperson told NewsFirst in remarks the broadcaster published as an exclusive.
The comments answer concerns about the burden that revenue-based fiscal consolidation places on households and businesses. The IMF said such reforms are a key pillar of the Extended Fund Facility programme and are meant to support the government’s effort to rebuild fiscal stability after the country’s worst economic crisis.
The headline figure
Tax revenue as a share of GDP has more than doubled since 2022, reaching 15.4 percent of GDP in 2025 — the highest level in a decade, the Fund said.
The IMF did not give the 2022 base figure, the 2026 outturn to date, or a target for the rest of the programme.
The social-protection argument
The Fund said the programme is not solely about revenue collection, and that strengthening social safety nets is a second pillar intended to shield poor and vulnerable groups from the impact of shocks and policy adjustments.
It pointed to work on improving the coverage and targeting of the Aswesuma welfare programme, and to the social spending floor built into the programme, which protects social protection spending as fiscal reforms continue.
The spokesperson listed targeted relief measures introduced to cushion global pressures: enhanced Aswesuma benefits, electricity and fuel subsidies, fertiliser assistance for farmers, and support for the fishing community. These were designed to mitigate the effects of the Middle East conflict and other external shocks.
What the Fund wants next
Sustaining revenue mobilisation will be critical to building resilience, improving the business environment and creating a tax system that better supports long-term growth, the IMF said.
Developing and implementing a medium-term revenue strategy would be an important next step, it added, including measures to improve the fairness and equity of the tax system. That strategy is the framework under which PAYE income tax is to be reviewed, as mission chief Evan Papageorgiou said in June — the Fund has now been describing it as a forthcoming step for at least three months without giving a date.
The IMF also cautioned that tax expenditures and exemptions should continue to be used very cautiously, stressing the importance of maintaining adequate fiscal buffers to prevent future vulnerabilities.
Timing
The remarks were published a day after an IMF team led by Evan Papageorgiou arrived in Colombo for a visit running to 23 September, combining the Seventh Review of the EFF programme with the 2026 Article IV Consultation.
Not reported
NewsFirst does not name the spokesperson or say whether the remarks were given in writing or in an interview, and does not date them. It is not stated whether the spokesperson is attached to the mission now in Colombo or answered from Washington, nor whether the comments were prompted by any specific proposal to ease the tax burden. No figure is given for the size of the tranche that would follow a successful seventh review, and no Executive Board date is mentioned.
