Sri Lanka’s improving tax performance is reshaping its sovereign risk outlook. With the tax-to-GDP ratio rebounding to 15.4% from pre-crisis lows near 10%, markets are seeing early signs that fiscal consolidation is becoming structurally anchored—supporting debt sustainability, IMF programme credibility and a gradual return to capital markets.

Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando said on Monday that tax revenue is on track to reach 16% of GDP by the end of this year, marking one of the strongest fiscal reversals in the country’s recent history. Speaking at a ceremony at the Inland Revenue Department (IRD) to present appointment letters to 100 newly recruited Assistant Commissioners, he said all three main revenue-collecting agencies—the IRD, Sri Lanka Customs and the Excise Department—have exceeded their annual targets.

From a macroeconomic standpoint, the recovery in revenue mobilisation reduces Sri Lanka’s reliance on debt accumulation, monetary financing and ad hoc tax measures—key vulnerabilities highlighted during the economic crisis. Dr. Fernando said the Government’s medium-term objective of lifting the tax-to-GDP ratio to 20% is achievable if credibility in fiscal governance continues to improve.

He attributed the revenue surge primarily to the restoration of trust between the state and taxpayers rather than to technology or enforcement alone. Improved compliance, he said, reflects growing confidence that public funds are being managed transparently and directed towards development priorities, reversing years of entrenched tax evasion linked to weak governance.

Fernando also stressed the correlation between higher tax ratios and lower corruption, noting that Sri Lanka’s revenue base had eroded sharply during periods of institutional decay. The recent rebound, he said, signals renewed accountability and more disciplined public financial management.

On public sector reform, he rejected the narrative that the public service is inherently a fiscal burden, arguing that inefficiencies stemmed from decades of politically motivated recruitment. The government, he said, is now rebuilding the public service through merit-based, competitive recruitment, aligned with broader public sector transformation and fiscal capacity. The newly appointed officers, he added, will play a critical role in strengthening revenue administration and policy implementation.

Turning to structural growth constraints, Dr. Fernando highlighted low labour force participation—particularly among women—as a key drag on income expansion and future revenue potential. Despite women accounting for a majority of the population, female participation remains below 30%, limiting productivity growth and narrowing the tax base. Raising participation levels, he said, is essential to sustaining higher growth over the medium term.

He also stressed the importance of simplifying the tax system to improve predictability and compliance while ensuring all eligible taxpayers are captured. Sustainable revenue growth, he reiterated, must come from broadening the base rather than imposing excessive burdens on a narrow segment of taxpayers.

By Ifham Nizam

The Initial Public Offering (IPO) of WealthTrust Securities Limited (WTS) will open tomorrow, inviting the public to subscribe for 71,548,244 Ordinary Voting Shares at an Issue Price of LKR 7.00 per share. Through the Issue, WTS seeks to raise a total of LKR 500,837,708, with the Company’s shares expected to be listed on the Diri Savi Board of the Colombo Stock Exchange (CSE).

WTS is a Primary Dealer authorised by the Central Bank of Sri Lanka, and is also licensed by the Securities and Exchange Commission of Sri Lanka as a Stock Broker (Debt) and Stock Dealer (Debt). The proceeds of the IPO are intended to further strengthen the Company’s core capital buffer and support the expansion of its investment and trading portfolio in government securities, enhancing capacity to manage market and interest rate risk while supporting sustained value creation.

The Issue is being managed by Asia Securities Advisors (Private) Limited as Manager and Financial Advisor to the Issue. With the offering priced at a discount to valuation benchmarks cited in the Prospectus, and with broad-based interest typically seen in well-positioned capital market listings, WTS enters its opening day with positive sentiment and strong anticipation among prospective investors.

CBC Finance Ltd, a subsidiary of the Commercial Bank of Ceylon PLC commemorated its listing on the Colombo Stock Exchange (CSE) by way of the issuance of LKR 1.5 bn worth of debentures by the ceremonial ringing of the market opening bell on the CSE trading floor.

CBC Finance Ltd raised LKR 1.5 Bn on 27th November 2025 with an oversubscription of an issue of 15 Mn Listed Rated Unsecured Subordinated Redeemable Debentures for a tenure of five years and a fixed interest rate of 11.50% p.a. payable annually (AER 11.50%), with a par value of LKR 100/- and an issue rating of “BBB+(lka)” by Fitch Ratings Lanka Limited.

Sharhan Muhseen, Chairman of CBC Finance Ltd and the Commercial Bank of Ceylon PLC, who was the events keynote speaker remarked upon the companies listing and CBC Finance’s role, commenting: “We are a key part of the economy. The development of the capital market is essential for the economic growth of the country. Thus, through this debenture issue, we encourage investors to participate in the development of the capital markets which is a key driver of economic growth.”

Delivering her welcome address at the event, Ms. Nilupa Perera, Chief Regulatory Officer of CSE, remarked upon the wide array of products CSE offers, stating: “The Colombo Stock Exchange has introduced several innovative instruments, from Shariah compliant debt instruments to GSS+ instruments – Green bonds, Social Bonds, Blue Bonds, sustainable and sustainability linked bonds, perpetual bonds and high yield debenture bonds. We hope that CBC Finance Ltd will use CSE to raise capital through these instruments.”

CBC Finance Ltd., formerly known as Indra Finance Ltd. and subsequently re-named as Serendib Finance Ltd., was acquired by Commercial Bank of Ceylon PLC in 2014. The company was established in 1987 as Indra Finance Ltd and has 21 branches island wide, delivering a wide range of financial services to Individual and SME segments, and enjoys an A (lka) Stable from Fitch Ratings Lanka Limited. In the financial year 2024, the company recorded a net profit of LKR 82 Mn and successfully expanded its Total Asset Base to LKR 17 bn. Its parent company, The Commercial Bank of Ceylon PLC, was named Sri Lanka’s Best Trade Finance Bank at the prestigious Euromoney Transaction Banking Awards 2025.