Sri Lanka's economy shows signs of recovery, World Bank reports

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Sri Lanka's economy shows signs of recovery, World Bank reports

The World Bank, in its twice-a-year update on Tuesday, projected a 1.7% growth for Sri Lanka's economy in 2024, following a contraction of 3.8% in 2023. Despite this positive forecast, the international financial institution warned that the outlook remains uncertain and hinges on progress with debt restructuring and the implementation of critical structural reforms.

In its latest Sri Lanka Development Update titled "Mobilizing Tax Revenue for a Better Future", the World Bank emphasized that improved revenue mobilization is crucial to Sri Lanka's return to macroeconomic stability. The report highlighted a government-led tax reform package that has been under implementation since May 2022. This package includes the introduction of new taxes, a wide range of adjustments to tax rates and bases, and an effort to improve the efficiency of tax collection and increase compliance.

Faris H. Hadad-Zervos, World Bank country director for Maldives, Nepal, and Sri Lanka acknowledged the critical reforms undertaken by Sri Lanka since the onset of the economic crisis. He emphasized that "staying on the course of reforms while managing fiscal risks is crucial to restoring a sustainable growth path." Hadad-Zervos also stressed that current efforts to mobilize tax revenue should go hand in hand with ongoing reforms towards expenditure transparency. This dual approach is necessary to build public confidence and deliver better public services.

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