By The International Monetary Fund (IMF) delegation in Colombo has met with Sri Lanka’s two main opposition parties, the Janatha Vimukthi Peramuna (JVP) and the Samagi Jana Balawegaya (SJB). While neither party has issued an official statement on the meetings, they have responded to media inquiries, indicating a willingness to engage with the IMF on further discussions concerning the country’s ongoing economic crisis.
However, significant differences emerged between the two parties’ approaches. The JVP, known for its advocacy for comprehensive public policy change, has not yet presented any concrete proposals for drastic alterations to the IMF’s current recovery program proposals.
The IMF delegation was led by the Senior Mission Chief for Sri Lanka, Peter Breuer.
Former MP and JVP economic affairs spokesman Sunil Handunneththi, who participated in the discussions, reiterated the party’s call for drastic changes to the proposals and emphasized the need for intensified anti-corruption efforts within the financial recovery process. Notably, JVP leader Anura Kumara Dissanayaka was not present at the meeting, although the party expressed its willingness to continue discussions with the IMF despite the existing disagreements.
SJB Willing to Amend Existing IMF Program
The SJB, led by Opposition Leader Sajith Premadasa, took a more moderate stance, expressing its willingness to move forward with the current IMF program with some adjustments. During the meeting with the IMF delegation led by Senior Mission Chief for Sri Lanka, Peter Breuer, Premadasa was directly asked how the party would restructure the current agreement if elected to power.
SJB MP Dr. Harsha de Silva, who was also present, revealed that the party is seeking changes to reduce the tax burden on the public. He further elaborated on a mutual understanding between the SJB and the IMF to “continue the existing program without major disruptions.”
The SJB presented three key proposals to the IMF delegation:
Reducing the Pay-As-You-Earn (PAYE) tax rate from 36% to 24%.
Maintaining the Value Added Tax (VAT) at 15%, aligning with the policy of the former Finance Minister.
Reconsidering the ad-hoc tax holidays granted to certain businesses.
IMF Acknowledges Recovery Signs, Pushes for Reforms
The IMF mission chief acknowledged the recent signs of economic recovery in Sri Lanka, including positive GDP growth, low inflation, increased revenue, and rising foreign reserves. However, the delegation also emphasized the importance of introducing a progressive property tax in 2025, which they consider crucial for achieving fairer taxation and consolidating revenue.
The opposition parties are well aware that regardless of their public pronouncements, Sri Lanka’s recovery and debt sustainability ultimately hinge on continued progress in reforms, including the implementation of the potentially unpopular property tax.
Mixed Reactions to Engagement with IMF:
The willingness of both SJB and JVP to work with the IMF is likely to be perceived as a positive development by some, while others may criticize it as a lack of resolve in challenging the perceived burden of “imperialist loan shark” conditions. Nonetheless, the IMF’s openness to discussing potential amendments with the opposition marks a positive step in the ongoing negotiations
