SL addresses US tariffs in IMF mission talks
View(s):Sri Lanka is hurrying to respond after the US imposed a huge 44 per cent retaliatory tariff on its exports—targeting US$3 billion worth of products, heavily in key sectors like apparel and textiles.
The one-sided measure has evoked immediate economic as well as diplomatic response; the US formally requesting Sri Lanka to make moves to improve its trade deficit. Under this set up the government has appointed a special committee to take prompt actions like revising the present tariff structure.
These details transpired during the ongoing Sri Lanka-International Monetary Fund (IMF) discussions on the potential effects of the new US trade policy. President Anura Kumara Dissanayake and senior IMF officials’ participated in a high-level meeting at the Presidential Secretariat on Monday, where the progress on the fourth tranche of Sri Lanka’s Extended Fund Facility (EFF) was discussed.
Negotiations centred on reforming the economy, the way forward to achieve fiscal targets, and how to mitigate the impact of the U.S. tariffs Deputy Director of the Asia and Pacific Department Sanjaya Panth led the IMF delegation including newly appointed Mission Chief Evan Papageorgiou, who is replacing Peter Breuer.
The fourth review on a preliminary basis would focus on priority areas for reform—chiefly, fiscal policy, tax compliance, and energy pricing.
The IMF emphasised the importance of maintaining reform momentum in order to achieve macroeconomic stability and debt sustainability.
In its suggestions, the IMF has directed Sri Lanka to avoid providing new tax exemptions but focus on enhancing compliance instead.
These steps are important in tackling the 2025 target of 13.9 per cent of tax revenue as a share of GDP, requiring an additional 1.6 per cent in gross revenue. Sri Lanka recently completed the third review of its 48-month EFF arrangement, disbursing approximately $334 million.
The success represented advancements in managing inflation, tax revenue, and foreign reserves. Economic growth has also reached 4.3 per cent since last year, with nearly 40 per cent of the losses of the period between 2018 and 2023 recovered.
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