Sri Lanka, July 23 -- Under the latest IMF extended fund facility program, Sri Lanka has achieved substantial increase in tax revenue - to a level never seen in the history. Data show that for the first quarter of 2026, tax collections increased by an impressive 49 percent compared to same period last year. With GDP growing at 5.1 percent, and inflation below 2.5 percent, first quarter economic performance looks good on "IMF report card!"

But underneath this achievement, a major economic risk is building up steadily. This is because taxes are growing at an extremely faster rate than the economy itself. Such scenarios eventually lead to gradual economic decline. This is because increasingly larger chunk of economic value addition is abso...