The International Monetary Fund (IMF) Mission to Sri Lanka has stated that the new tax reforms in Sri Lanka helps meet the objective of correcting the imbalance of tax revenue and expenditure.

An IMF statement said the hikes, which included an up to 36% rise in income taxes, were essential to tackle revenue collection that has been low by global standards.

External financing would not bridge the gap needed to fund essential expenditure, the statement added.

Efforts to increase tax revenues should be pursued in a growth-friendly manner while protecting the poor and most vulnerable,” the IMF said. “It is however also important that those who can most afford it make commensurate contributions to the financing of the necessary government expenditures.”