News
IMF urges Sri Lanka to raise taxes, devalue currency
The International Monetary Fund warned crisis-hit Sri Lanka on Thursday that its foreign debt was “unsustainable”, and called for devaluation and higher taxes to revive the almost bankrupt economy.
The pandemic pushed the South Asian island’s tourism sector — a key foreign-exchange earner — off a cliff, and the government in March 2020 imposed a broad import ban to try to shore up foreign currency.
But more than two years on, Sri Lanka is grappling with food and fuel shortages, which this week saw its public transport crippled as buses ran out of diesel and the state imposed blackouts.
Following its annual review of the cash-strapped country, the IMF said its fast-dwindling foreign reserves were inadequate to service the country’s current foreign debt of $51 billion.
Official data shows Sri Lanka needs nearly $7 billion to service its foreign debt this year, but the country’s external reserves at the end of January were only $2.07 billion — just enough to finance one month’s imports.
The IMF stressed “the urgency of implementing a credible and coherent strategy to restore macroeconomic stability and debt sustainability”, recommending a return to a “market-determined and flexible exchange rate” — meaning a devaluation of the Sri Lankan rupee.
While the central bank’s set rate is 197 rupees to the dollar, a thriving black market offers 260 rupees for US currency notes.
This disparity has led to a more than 50 percent decline in foreign remittances through official banking channels.
But the IMF noted the country’s economic woes began pre-pandemic.
Soon after taking office in November 2019, President Gotabaya Rajapaksa cut several taxes nearly in half, the IMF said, driving down government revenues and forcing it to borrow more.
Among recommendations to address the crisis was to raise income taxes and VAT, “complemented with revenue administration reform”, the IMF said.
The lack of dollars to import fuel has led to a serious energy crisis.
Besides bringing public transport to a halt on Wednesday, the state’s electricity company also imposed a daily seven-and-a-half-hour electricity blackout — the longest scheduled power rationing in over a quarter of a century.
Without dollars to finance essential imports, rice, milk powder, sugar and wheat flour are in short supply, while local industries are unable to bring in raw materials and machinery.
The shortages pushed inflation to 16.8 percent in January — the fourth consecutive record rise — and the IMF said it expected it to remain in the double digits.
International rating agencies have downgraded Sri Lanka over expectations it may not be able to service its foreign debt, though the government insists it can meet its obligations.
The Memorandum of Understanding (MoU) relating to the project to provide technological solutions to prevent wild elephants from being hit by trains was signed yesterday (01) afternoon at the President’s Media Centre, under the patronage of Secretary to the President Dr Nandika Sanath Kumanayake.
Coordinated through the “Clean Sri Lanka” programme, the project is being implemented as a public-private partnership, with the Railway Department, the Department of Wildlife Conservation and the Forest Conservation Department working together, with full financial support from People’s Bank.
The system consists of three-beam detection, passive infrared (PIR) sensors, automatic temperature sensors and a tamper alarm system to detect animals weighing more than 20 kilogrammes and unauthorised interference. Signal lights (red/yellow/green) installed on either side of the railway tracks, together with a special screen installed inside the locomotive cab, will alert the driver in advance to the exact location of an elephant.
A demonstration test of the system was successfully conducted at the Pinnawala Elephant Orphanage premises in the presence of the relevant officials, following which a report on the system was prepared.
The system will be implemented as a pilot project from next month at 13 locations where wild elephant accidents are frequent. A newly developed website is also scheduled to be launched to enable the progress of the project to be viewed live.
Additional General Manager of Railways P.D.S.B. Chandrasena, Director General of Wildlife Conservation M.S.L.R.P. Marasinghe, Conservator General of Forests S.C. Palamakuumbura and Chairman of People’s Bank Chandana Guniyangoda signed the relevant MoU. Officials from the Clean Sri Lanka Secretariat, including Presidential Additional Secretary (Clean Sri Lanka) Engineer S.P.C. Sugeeshwara, as well as senior officials from the Railway Department, Department of Wildlife Conservation, Forest Conservation Department and People’s Bank, were also present.
[President’s Media Division]
The Commissioner General of Examinations has announced that the results of the 2026 Grade 5 Scholarship Examination have been released online, and can be viewed on the department’s official website: www.doenets.lk
Prime Minister Dr. Harini Amarasuriya departed Sri Lanka on Monday, 31 August, to undertake an official visit to Bhutan to participate in the Global Conscious Food Systems Summit, scheduled to be held in Bhutan.
During her visit, Prime Minister Dr Amarasuriya participated in the opening plenary of the Summit on 1 September, where she delivered a keynote address under the theme “Rising to the Moment: Igniting Consciousness to Address the Polycrisis.”
The Prime Minister will also engage in discussions with international leaders and representatives on strengthening cooperation towards sustainable food systems, food security and resilient communities.
[Prime Minister’s Media Division]
MoU signed for technology to prevent wild elephant-train collisions
Grade 5 scholarship exam results released
Prime Minister participates in Global Conscious Food Systems Summit in Bhutan
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