Sri Lanka Gains IMF Flexibility Amid Economic Recovery

Sri Lanka's President Anura Kumara Dissanayake announced flexibility with the IMF on the country’s tax regime. After a challenging economic period, the IMF agreed to gradual vehicle importation alongside tax reliefs and debt restructuring. These changes align with Sri Lanka's economic recovery plans, bolstered by the USD 2.9 billion IMF facility.

Sri Lanka's President, Anura Kumara Dissanayake, revealed a significant development in the country's economic recovery efforts. In an announcement on Wednesday, he confirmed that Sri Lanka has secured flexibility from the International Monetary Fund (IMF) regarding its strict state revenue tax regime—a major part of his electoral promises.

The president, who also serves as the Minister of Finance, disclosed that the ban on private car imports, in place since 2020, will be lifted. Starting December 14, vehicles for passenger transport and special purposes can be imported, with all private car imports resuming in February 2025. This follows successful negotiation with the IMF during its third review of the USD 2.9 billion Extended Fund Facility.

Dissanayake emphasized enhancements to the tax system, including raising the income tax threshold and implementing other tax exemptions, aimed at benefiting different income groups and retirees. These initiatives, part of Sri Lanka's broader economic revival strategy, come as the nation prepares to present its 2025 budget.

(With inputs from agencies.)