Fitch Ratings expressed concerns about Sri Lanka's ambitious fiscal targets for 2024, highlighting significant risks in achieving its revenue goals and managing a wider budget deficit. Despite plans to increase revenue by 45% and raise the Value-AddedTax, Fitch anticipates challenges due to historical fiscal slippage and weaker inflation-driven revenue growth. The government aims for a budget deficit of 9.1% of GDP, affected by bank recapitalisation costs. Although the targets align with the IMF's projections, Fitch noted higher government expenditure plans than the IMF's expectations. The agency also mentioned potential election-driven incentives to adhere to spending plans, the establishment of new revenue and investment bodies for governance reform, and the conditional release of further IMF financing, all while maintaining Sri Lanka's 'RD' (Restricted Default) rating.

Sri Lanka faces uphill battle in meeting 2024 budget targets: Fitch - Breaking News | Daily Mirror