Sri Lanka's government revenue rose 17 percent in the first quarter compared to a year ago, surpassing Colombo's expectations, due to higher tax collection, Finance Minister Ravi Karunanayake said on Sunday. The government raised its Value-Added Tax from November last year, while implementing measures to help make it easier to pay taxes. Tax revenue rose 9.2 percent to 1.66 trillion rupees ($10.89 billion) last year, with the island nation achieving its 5.4 percent of the gross domestic product (GDP) budget deficit target from 7.4 percent in 2015.

Karunanayake said total net borrowing fell by 22.3 percent last year due to higher tax collection. The finance minister also said a new tax revenue proposal, which has yet to be approved by the parliament, would further increase government coffers in the coming years. "The new tax structure is an incentive for investors," he said. "Unlike earlier, the more you invest, the more concessions you get."

The International Monetary Fund (IMF), which approved a $1.5 billion loan last year, urged the government earlier this month to submit to parliament a new Inland Revenue Act, as a prior action to disburse a third tranche of aid in June.

Copyright Reuters, 2017