The International Monetary Fund (IMF) has urged the Sri Lankan government to reform its tax policies and control expenditure to address ongoing budget deficits and align spending with revenue. The IMF also emphasized the continuation of progressive tax reforms to stabilize the economy.
The new government introduced tax reforms aimed at providing relief to individuals and small businesses affected by inflation and high living costs. However, these measures have come under IMF scrutiny.
The IMF will assess these tax policies in a report to be submitted to its executive board, which must approve the release of a $333 million tranche under the Extended Fund Facility program.
Julie Kozack, Director of the IMF Communications Department, confirmed that the report will be published after the board’s meeting in the coming months.
Sri Lankan authorities are expected to comply with IMF-backed economic reforms. Any deviation could strain relations with the IMF and complicate future negotiations with international lenders.
A former treasury secretary noted that failing to adhere to IMF recommendations might hinder Sri Lanka’s access to foreign funding.
President Anura Kumara Dissanayake, who also serves as Finance Minister, announced an increase in the income tax-free threshold from Rs 100,000 to Rs 150,000.
While this change aims to ease the tax burden, it could result in revenue shortfalls if a significant portion of taxpayers is exempted. To offset this, the government plans to raise the Withholding Tax (WHT) from 5 percent to 10 percent.
Additionally, VAT exemptions for locally produced dairy products like yogurt could lead to revenue losses. The government also plans to remove tax exemptions on service exports and introduce a 15 percent concessionary rate, potentially making Sri Lanka less competitive compared to nations offering lower tax rates or exemptions for export industries.
To support pensioners and lower-income earners, the government will allow individuals earning below Rs 150,000 or paying less than 10 percent in income tax to apply for lower withholding tax rates through the Inland Revenue Department.
Furthermore, as part of the IMF-backed third review, the government has agreed to withdraw VAT on fresh milk and yogurt to promote child nutrition.
The IMF’s proposed tax reforms, effective January 1, 2025, aim to increase the tax-to-GDP ratio to 14 percent by 2026. Key changes include a new imputed rental income tax on residential properties, contributing 0.15 percent of GDP, and an increase in VAT on digital services to 18 percent, generating an additional 0.08 percent of GDP.
Corporate taxes will rise for tobacco and betting industries, while stamp duties on leases will double. The removal of the Simplified VAT (SVAT) system is expected to add administrative burdens on businesses.
Furthermore, import restrictions on vehicles and goods will be lifted, adding 0.8 percent of GDP but increasing competition for local industries.
While these measures aim to enhance revenue and economic equity, they may also result in higher costs for consumers, businesses, and property owners. Short-term inflationary pressures are likely, though improved tax compliance and reduced evasion could strengthen fiscal stability.Despite immediate challenges, the IMF insists these reforms are crucial for Sri Lanka’s long-term economic health and debt sustainability
Despite financial limitations, President Anura Kumara Dissanayake has emphasized the responsibility of government officials to allocate and utilize funds efficiently and equitably, aligning with development priorities outlined in the recent budget.
This was highlighted during a meeting held today (25) at the Presidential Secretariat, where the President engaged in discussions with Ministry Secretaries, according to the President’s Media Division (PMD).
The President underscored the need for high levels of accountability in managing government expenses and acknowledged public dissatisfaction with the inefficiencies within the public sector. He noted that concerns over employment conditions among government employees have contributed to these inefficiencies and stressed the importance of addressing them to improve overall service delivery.
To further reduce administrative costs, the President pointed out that as expenses have been cut at the Cabinet level, state institutions must also take steps to minimize wastage. Several cost-cutting measures were discussed, including:
Relocating government offices to state-owned buildings
Auctioning high-maintenance ministerial vehicles by March
Removing unused office equipment
Identifying institutions for closure, mergers, or public-private partnerships
The meeting was attended by Secretary to the President Dr. Nandika Sanath Kumanayake, Secretary to the Prime Minister G.P. Saputhanthri, and other Ministry Secretaries.
“Maha Shivaratri is a sacred and joyous occasion celebrated by Hindu devotees across the world in reverence of Lord Shiva. This divine night marks the celestial union of Lord Shiva and Goddess Parvati, as well as the powerful Tandava, Shiva’s cosmic dance of creation and destruction. It symbolises the triumph of wisdom over ignorance, dispelling the darkness of illusion and lighting the path to enlightenment.
On this auspicious night, Hindu devotees observe fasting and engage in spiritual practices, praying for the darkness of ignorance to be replaced by the radiance of wisdom. It is also a time to seek divine blessings for prosperity, peace and fulfilment in life.
The union of Shiva and Parvati is a profound representation of knowledge and power coming together. It reminds us that breaking free from the illusions of division allows us to embrace the truth with open eyes. Today, as we stand at the dawn of a new era, this message is more relevant than ever. Let us tear down the barriers that have kept us apart for generations and unite as one, casting aside discord and embracing togetherness. This is a moment to nurture interfaith harmony, celebrate our diversity and move forward with love and mutual respect, dedicating ourselves to the progress of our beloved motherland.
As we journey towards a brighter future, it is our collective responsibility to build a nation grounded in unity and strength. We are stepping into a time of transformation, embracing political, economic and social renewal, shaping a future that holds promise and hope for all.
On this sacred night, as the glowing lamps of Maha Shiva Rathri illuminate our surroundings, let them also illuminate our hearts, guiding us with unwavering faith along the path we have chosen. Let us walk forward together, hand in hand, in the spirit of peace, unity and shared prosperity.
May this Maha Shiva Rathri bring fulfilment, happiness and boundless blessings to all Hindu devotees in Sri Lanka and around the world.”
Police have arrested another suspect in connection with the recent triple homicide in Middeniya, where a father and his two children were shot dead while riding a motorcycle.
The suspect was apprehended by officers from the Tangalle Divisional Crimes Unit in the Wakamulla area of Weeraketiya yesterday (25), the Police Media Division reported.
With this latest arrest, the total number of suspects in custody, including a police constable, has risen to six.
The tragic incident occurred on the night of February 18, when gunmen opened fire on a man traveling with his two children near Kadewatta Junction, Middeniya. The father was killed instantly, while his six-year-old daughter and nine-year-old son, who sustained critical injuries, were rushed to Embilipitiya and Tangalle hospitals. Despite medical efforts, the daughter succumbed to her injuries shortly after admission, and the son passed away the following day.
Middeniya Police continue to investigate the incident.
A workshop aimed at guiding state entrepreneurs toward a sustainable plantation economy was conducted at the Parliament premises.
The event featured key lectures on sustainability in the plantation sector and a comprehensive session on national auditing, delivered by Auditor General W.P.C. Wickramaratne.
Among the distinguished attendees were Director General of the Department of Public Enterprises P.A.S. Athula Kumara, Director K.V.C. Dilrukshi, Director General of the Department of Management Services Wimal S.K. Liyanagama, Director R.K. Jayalath, and Assistant Director H.A.S.P. Hettiarachchi. Representing the Parliament of Sri Lanka, Director of Legislative Services Jayalath Perera and Director of Communication Services were also present.
Deputy Minister of Plantations and Community Infrastructure Sundaralingam Pradeep, along with Assistant Secretaries of the Ministry, Chairpersons, and Board Members of affiliated institutions, participated in the workshop, underscoring the government’s commitment to fostering sustainability in the plantation sector.
President Anura Kumara Dissanayake met with Severine Chappaz, the newly appointed Head of Delegation of the International Committee of the Red Cross (ICRC), yesterday (25) at the Presidential Secretariat to discuss collaborative efforts between Sri Lanka and the ICRC.
Key topics of discussion included the ICRC’s support for the new government’s policy framework, particularly in strengthening the Office on Missing Persons (OMP). As part of this initiative, the Sri Lanka Red Cross Society has committed to providing technical assistance and capacity-building support.
President Dissanayake emphasized that the 2025 budget has allocated funds for ongoing programs aimed at searching for missing persons, reflecting the government’s commitment to addressing this critical issue.
Additionally, the President announced plans to introduce “Sri Lankan Day,” a national initiative designed to promote unity and strengthen the country’s collective identity by transcending ethnic and religious divisions.
Expressing his gratitude, President Dissanayake commended the ICRC for its humanitarian efforts in Sri Lanka since 1989 and acknowledged its continued commitment to the country.
Sri Lanka Muslim Congress (SLMC) MP Rauf Hakeem has called for a comprehensive assessment of illegal weapons possessed by underworld groups, emphasizing the urgent need for the government to trace and neutralize them to curb rising criminal activities.
Speaking during the second reading debate of Budget 2025 in Parliament yesterday, Hakeem stressed that unchecked shootings pose a severe threat to public safety. He urged authorities to take immediate steps to dismantle underworld networks by identifying and deactivating all illicit arms.
He further noted that Prime Minister had assured Parliament of the government’s commitment to controlling underworld activities. Recalling past incidents, Hakeem pointed out that various armed groups had operated illegally in the country, sometimes with the support of ruling parties. He also highlighted cases where weapons were looted from armories, fueling criminal networks.
“We need to locate these weapons and bring them under government control. Without doing so, we cannot effectively combat underworld activities,” Hakeem asserted. He urged the government to take decisive action in ensuring these weapons do not remain in circulation.
President Anura Kumara Dissanayake met with Indonesian Ambassador to Sri Lanka, Dewi Gustina Tobing, at the Presidential Secretariat yesterday (25), reinforcing the long-standing diplomatic relationship between the two nations.
Ambassador Tobing conveyed Indonesia’s best wishes to the new Sri Lankan government and reaffirmed her country’s commitment to further strengthening the 70-year-old bilateral ties. She also noted that both Sri Lanka and Indonesia recently held elections and established new administrations, emphasizing the potential for enhanced cooperation.
During the discussions, the Ambassador expressed Indonesia’s support for Sri Lanka’s ‘Clean Sri Lanka’ programme, highlighting similar initiatives undertaken in Indonesia. The two sides also explored the possibility of establishing new trade agreements and free trade arrangements to boost economic collaboration.
Further discussions centered on expanding markets in a mutually beneficial manner while deepening economic, social, and cultural ties between the nations.
Senior Additional Secretary to the President Roshan Gamage and Indonesian Deputy Ambassador Fiki Oktanio also participated in the meeting.
Showers or thundershowers will occur at times in Northern, North-central, Eastern and Uva provinces and in Matale, Nuwara-Eliyaand Hambantota districts. Showers or thundershowers will occur at several places elsewhere during the afternoon or night.
Fairly heavy showers above 75mm can be expected at some places in Eastern and Uva provinces and in Matale, Nuwara-Eliya, Polonnaruwa, Galle, Matara, Kalutara and Rathnapura districts.
Fairly strong winds of (30-40) kmph can be expected at times over Northern, North-central, Eastern and North-western provinces and in Matale, Nuwara-Eliya and Hambantota districts.
The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.
February 25, Colombo (LNW): The Sri Lankan government has reiterated its strong and unwavering commitment to fostering a united nation that celebrates the diversity of its citizens, free from divisions based on race, religion, class, or caste.
Foreign Minister Vijitha Herath made these remarks during his speech at the High-Level Segment of the 58th Regular Session of the United Nations Human Rights Council (UNHRC) in Geneva on Tuesday (25).
Minister Herath stressed that Sri Lanka is determined to prevent any resurgence of divisive racism or religious extremism. He assured the international community that the government would continue to strive towards a society where every citizen can freely practise their religion, express their language, and live according to their cultural values, without fear of discrimination or prejudice.
“We will not allow any room for the return of divisive forces in our society,” Herath declared, emphasising that Sri Lanka’s Constitution, which upholds the democratic principles of freedom and human rights, will remain the cornerstone of the nation’s progress.
The Foreign Minister reaffirmed the government’s commitment to human rights, reconciliation, and sustainable development, highlighting the steps the government has taken towards national unity and international cooperation.
He further stressed that the country’s fundamental rights framework would be fully respected, ensuring that all citizens can live in an inclusive society, where differences in beliefs, culture, or political views do not lead to marginalisation or undue pressure.
Minister Herath also mentioned the government’s ongoing efforts to advance national reconciliation, including the President’s proposal to establish a “Sri Lanka Day,” symbolising the country’s commitment to bridging divides and celebrating unity among its diverse communities.
The government, he said, is committed to strengthening domestic mechanisms aimed at addressing the aftermath of the conflict.
Key institutions such as the Office on Missing Persons (OMP), Office for Reparations, and the Office for National Unity and Reconciliation (ONUR) will be empowered to continue their crucial work independently and with credibility.
The Minister outlined plans to further engage with all stakeholders in the development of a comprehensive truth and reconciliation framework, designed to gain the trust of all Sri Lankans.
He highlighted the importance of a commission capable of investigating violence driven by racism and religious extremism, which have historically created tensions within Sri Lankan society.
Furthermore, Herath noted that the government is fully aware of its responsibility to deliver on the aspirations of all Sri Lankans, including those from the Northern and Eastern provinces, ensuring a just and prosperous society for all.
As Sri Lanka continues its journey towards national unity and inclusive development, the Foreign Minister emphasised the vital role of international support in this process.
He reiterated the country’s commitment to engaging in genuine dialogue and cooperation in human rights, maintaining a constructive relationship with the UN Human Rights Council and other international bodies.
Concluding his remarks, Minister Herath reaffirmed Sri Lanka’s readiness to collaborate with the UNHRC and support the global effort to address pressing human rights challenges, in alignment with the UN’s principles of universality, impartiality, and objectivity.
Full Speech:
“Mr. President, I wish to congratulate you on your election as the President of this Council.
At the Presidential and Parliamentary elections held a few months ago, the people of Sri Lanka took a progressive decision to elect a new government with a strong mandate to direct the country towards economic, social and political transformation. The results of these elections held in November 2024 bears special significance on several fronts. It reflected a collective and unified voice from people of all regions of the country – North, South, East, West – and of all ethnicities and religions, in support of change and positive transformation. The current Parliament which was formed after the election is one of the most inclusive in our history, with a record number of women, representatives of different communities including two women from the Malayaga community and a visually impaired person being part of the Legislature of the country. This inclusivity represents Sri Lanka’s new path focused on upholding the rights of all its people irrespective of differences based on gender, ethnicity or other grounds.
I would like to quote from the speech delivered by our President, Anura Kumara Dissanayake, at the inauguration of the first session of the Tenth Parliament: “Elections create a contract between the people and us. This bond is formed when we present our policy statements and ideas, outlining how the country’s future should be shaped. People who place their trust in these ideas cast their votes for us. With their votes, the people have fulfilled their part in this relationship by granting us the mandate to govern. Now, it is our turn to fulfil our part by serving the people.”
In 2022, Sri Lanka went through its deepest and most complex social, economic and political crisis since independence. As you know, the impact of the economic crisis gave rise to a humanitarian situation affecting all segments of the population, especially the poorest and the most vulnerable segments of the society. The Government led by President Anura Kumara Disanayake has emerged successful in stabilizing the economy, and we are currently in the process of laying the foundation toward economic transformation and greater economic democratization through fair distribution of opportunities.
We are acutely aware of the continuing impact of the economic challenges on our people, particularly the most vulnerable, and the government continues to take decisive steps to advance the economic and social rights of the people. In the National Budget for 2025 presented to the Parliament last week, we have committed to take series of measures to extend much needed relief and empowerment to the people including increased allocation for social welfare and security. Significantly, the budget proposals have also made historic allocations for health and education and provide for a series of empowerment measures to vulnerable groups such as women, children including orphaned, disabled or autistic children, estate sector population, students, persons with disabilities and people living in conflict affected or under-developed areas of the country. Special attention has been paid to improving the socio-economic conditions and address critical needs such as resettlement, housing, compensation and infrastructure development in the conflict-affected Northern and Eastern Provinces.
The Government has been actively working to develop infrastructure, support livelihoods and promote industries in the Northern and Eastern Provinces, aiming to enhance connectivity and support regional development.
With the launch of the “Clean Sri Lanka” project by H.E. the President on 01 January 2025, the Government has taken steps to introduce a new political culture and commitment to moral and ethical governance. The ‘Clean Sri Lanka’ programme is a holistic undertaking aimed at nation-wide efforts of environmental, social, and governance initiatives to bring about change, integration, and collaboration, in environment, social and governance structures.
In line with the mandate given by the people, the Government will prioritize integrity and addressing issues of mismanagement and corruption that were at the root of the economic collapse, in taking our country towards sustainable development. Through digital transformation of government structures at all levels, we hope to ensure that inefficiency and corruption will be minimized.
The Government led by President Anura Kumara Disanayaka is firmly and sincerely committed to working towards a unified Sri Lanka that respects and celebrates the diversity of its people with no division or discrimination based on race, religion, class and caste. We will not leave room for a resurgence of divisive racism or religious extremism in our country. The fundamental and longstanding principles of democracy and freedom enshrined in our Constitution will be fully respected and safeguarded while protecting the human rights of all citizens. Every citizen should feel free to practice their religion, speak their language, and live according to their cultural values without fear or discrimination. No one should feel that their beliefs, culture, or political affiliations will make them targets of undue pressure or prejudice. Administrative, political and electoral processes will be activated towards this end.
The Government has pledged to take tangible steps in the interest of further advancing national unity and reconciliation. The President has proposed to declare a Sri Lanka Day, in line with our vision for a reconciled Sri Lanka and commitment to bridging gaps between communities. We will ensure that the domestic mechanisms and processes established to address challenges emanating from the conflict will continue their work in an independent and credible manner within the Constitutional framework. Domestic institutions such as the Office on Missing Persons (OMP), Office for Reparations, and Office for National Unity and Reconciliation (ONUR) will be strengthened. The contours of a truth and reconciliation framework, will be further discussed with the broadest possible cross section of stakeholders, before operationalization to ensure a process that has the trust of all Sri Lankans. Our aim is to make the domestic mechanisms credible and sound within the constitutional framework. This will include strengthening the work towards a truth and reconciliation commission empowered to investigate acts of violence caused by racism and religious extremism that give rise to tensions within Sri Lankan society.
A number of confidence building measures have also been taken in the last few months towards reconciliation. In November 2024, a number of roads in the Northern Province including the Palali- Achchuveli main road were opened for public use after several decades. The President, during his visit to the North in January this year, made an open invitation to Tamil-speaking youth to be part of Sri Lanka’s police service. The 2025 budget includes significant allocations to upgrade the libraries throughout the country, including the historical Jaffna library which is a symbol of education and enlightenment for the Tamil community.
The Government is fully cognizant of the responsibility that accompanies the people’s mandate, including the people of the Northern and Eastern provinces, to fulfill their aspirations for a just, fair and prosperous society for all our citizens. As we move forward on our path towards national unity and reconciliation and inclusive development, the continued encouragement and support of the international community will be important.
Sri Lanka is an active member of the United Nations since 1955. We are a State Party to all the 09 core UN human rights instruments and engage with Treaty Bodies and regular mechanisms of this Council on a regular basis. In the past few years, we have received over 10 Special Procedures and engaged productively with Treaty Bodies, most recently with the CEDAW Committee, ICCPR and the Universal Periodic Review process. We are committed to genuine dialogue and cooperation in human rights through continuous and constructive engagement.
Conflict, inequality, and extreme climatic conditions are driving millions into poverty daily, while countless men, women, and children continue to suffer or perish in wars across the globe. Addressing these critical challenges is essential to protect human rights and safeguard our planet for future generations.
Sri Lanka stands ready to support the Human Rights Council in addressing these pressing global challenges in a balanced and holistic manner in line with its founding principles of universality, impartiality, objectivity and non-selectivity. We believe that States must be encouraged and empowered to address their challenges through robust national human rights frameworks, supplemented by assistance upon request. .
As a nation on the trajectory towards people-led and people-centric national transformation and as a responsible member of the international community, Sri Lanka will continue to work in a constructive spirit of dialogue and cooperation with the members of the United Nations including this Council within our national legal framework.
