•  Tax hikes may trigger protests but are vital for economic stability

Necessary financial policies must be implemented regardless of whether the public supports them, Central Bank of Sri Lanka (CBSL) Governor Dr Nandalal Weerasinghe said.

He made the remarks while delivering a lecture at the University of Kelaniya.

He said the CBSL had already implemented difficult decisions and policies to safeguard the economy and would not hesitate to introduce further measures when necessary.

He stressed that failing to implement such policies simply because they were unpopular could ultimately cause serious harm to the country as a whole.

Dr Weerasinghe further said tax rates sometimes had to be increased to meet the country's needs, even though most people were opposed to higher taxes.

The Governor acknowledged that such decisions could trigger public protests and create a degree of instability.

He said the Government had a responsibility to clearly explain to the public how tax increases or reductions would affect the economy. Proper communication, he added, would help people understand the reasons for the decisions and support the successful implementation of economic policies.

Dr Weerasinghe also stressed the importance of introducing tax changes at the appropriate time. The Government needed to recognise that there would always be sections of society opposed to tax increases, he said.

Despite the severe political and economic crises Sri Lanka had faced in recent years, the economy had been kept relatively stable because necessary, albeit unpopular, decisions had been implemented at the right time, the Governor added.