Sri Lanka will strive to tighten its belt and maintain policy consistency to improve its debt rating and help make capital Colombo a global financial center, the country's finance minister told CNBC on Monday.
The new administration will raise value-added tax (VAT) and reintroduce capital gains taxes as it seeks to improve Sri Lanka's finance outlook, Ravi Karunanayake told CNBC's "Capital Connection."
"We want to tax the top end of [the consumer], which basically consumes, rather than the downtrodden," Karunanayake said, calling it a necessary measure to achieve fiscal consolidation.
"Imposing new taxes is a hard-sell, but what more can you do?"
The finance minister added his administration's long term target is to reduce Sri Lanka's budget deficit to 3.5 percent of gross domestic product (GDP) by 2019-2020. Government data showed Sri Lanka's budget deficit was at 6 percent of GDP for 2015.
According to Reuters, Prime Minister Ranil Wickremesinghe told lawmakers VAT would be hiked to 15 percent from 11 percent, while capital gains will be taxed for the first time since 1987.