Sri Lanka's economy is expected to grow by 1.7% in 2024 after contracting by 3.8% in 2023, the World Bank said in its twice-a-year update on Tuesday.

The World Bank said that the outlook is clouded with uncertainty and that growth prospects depend on progress with debt restructuring and the implementation of critical structural reforms.

The World Bank released on Tuesday its latest Sri Lanka Development Update, Mobilizing Tax Revenue for a Better Future, saying that improved revenue mobilization is critical to Sri Lanka's return to macroeconomic stability.

A government-led tax reform package has been under implementation since May 2022, which includes the introduction of new taxes, a wide range of adjustments to the tax rates and bases, and an intention to improve the efficiency of tax collection and increase compliance, it said.

"Sri Lanka has carried out critical reforms since the start of the economic crisis. Staying on the course of reforms while managing fiscal risks is crucial to restoring a sustainable growth path," said Faris H Hadad-Zervos, World Bank country director for Maldives, Nepal, and Sri Lanka.

He said current efforts to mobilize tax revenue should be coupled with continued reforms towards transparency of expenditures to build public confidence and to deliver better public services.

- The Business Standard