330 : Sri Lanka’s Economic Crisis and Post-Budget 2016 Tax Changes
Ms. Iromi Dharmawardhane , Research Associate at ISAS
4 May 2016
Sri Lanka may face a severe balance of payments crisis, primarily brought on by the inability
to service foreign loans, a high fiscal deficit and a foreign exchange crisis, if the government
fails to finance the deficit in time through foreign borrowings. In an effort to increase
revenue and stabilise the economy, the government also plans to make structural changes to
its fiscal policy. New taxes and revisions to those proposed in Budget 2016 were announced
in March 2016 to widen the country's tax base. While post-war Sri Lanka carries much
growth and investment potential, the country's near-term economic outlook remains
precarious.