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Government’s tax collection exceeds IMF target
View(s):The government outperformed the targets set by the International Monetary Fund (IMF) on quarterly tax revenue collection, bringing in billions of rupees through vehicle imports and other tax avenues, but recorded a lower capital expenditure, a Parliamentary Oversight Committee has observed.
The achievement was noted in the Committee on Public Finance’s (COPF) report on the Appropriation Bill for 2026. The report, tabled in Parliament this week, focuses on the fiscal, financial and economic assumptions to analyse the estimated expenditure and revenue of the budget.
The report indicated that the government is ensuring momentum to meet the expected tax-to-GDP level throughout the year, and as a result, the estimated collections of Rs 4,725 billion are expected to comfortably exceed the IMF target of Rs 4,350 billion.
Last year’s tax revenue target of Rs 3,700 billion was also met at the end of the year.
The COPF also pointed out that the July 2025 IMF review document had set targets of Rs 850 billion for March 2026 and Rs 1,850 billion for June 2026, on the way to reaching 14.2% of GDP in tax revenue for the full year.
“Given the full-year target of LKR 4,910 billion in tax collections and collections of LKR 985 billion and LKR 2,152 billion achieved by March and June 2025, respectively, these targets should be comfortably met in 2026,” the report added.
The Committee chaired by Dr Harsha de Silva tabled its report on the budget on Friday (14) ahead of the vote on the Second Reading of the Appropriation Bill. The second reading was passed with 169 votes cast in favour and 42 against. Eight MPs abstained.
Noting that primary surplus overperformance was driven predominantly by the lower-than-budgeted capital expenditure, the COPF observed that lower-than-expected capital expenditure creates an expectations gap between what the budgets promise and the benefits received by the economy and society.
“Delays in implementing critical public investment can contribute to slowing down future productivity improvements, affecting the ability to sustain robust GDP growth rates. Overcoming these will be vital to achieving the 4 per cent of GDP in capital expenditure that is being budgeted for 2026 as well,” the Committee noted.
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