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In 2009 Sri Lanka's rulers busted a deficit target of 7.0 percent of gross domestic product agreed with the IMF in May 2009 to escape a balance of payments crisis, but spent their way to a 9.
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8 percent deficit.
"In our discussions, the government has laid out a set of policies untended to correct the slippages and move towards sustainable deficit reduction while securing spending for protecting the most vulnerable in society," IMF mission chief Brian Aitken said.
"They expect to present to parliament shortly a 2010 budget involving substantial deficit reduction for the year as a whole, driven primarily through savings in recurrent spending."
Aitken said the mission was encouraged by the policy direction of the government which aimed to broaden the tax base, by reducing tax holiday given to foreign investors by its Board of Investment.
Sri Lanka started giving tax incentives to foreign investors and undermined the country's rule of law and equality from 1979 a