Colombo, Jan 10 (EFE).- The Sri Lankan government decided Tuesday to cut the allocated budget of each ministry by five percent in an attempt to keep expenditure in check as the island nation struggles to keep afloat amid the acute economic crisis.
Moreover, the government’s position has also been influenced by a delay in the agreement with the International Monetary Fund for a bailout package.
Cabinet spokesperson Bandula Gunawardena, during a cabinet briefing on Tuesday, said priority will be given to paying salaries of state employees, pensions, and interests on state loans.
President Ranil Wickremesinghe has also informed the cabinet that monthly payments for low-income families may get delayed by a week or two in January, he added.
“In the past, all governments managed these expenses by printing money and taking loans,” Gunawardena said, adding that lending agencies and the IMF have prohibited the government from further printing money.
Therefore, the government must rely on tax income, he explained.
According to a World Bank report last year, Sri Lanka’s real gross domestic product (GDP) was expected to dip by 9.2 percent in 2022 and a further 4.2 percent in 2023.
According to the latest statistics by the Central Bank of Sri Lanka, the real GDP of the island nation in the third quarter of 2022 was -11.8 percent.
In September last year, Sri Lankan authorities and the IMF staff reached a staff-level agreement for an Extended Fund Facility of $2.9 billion.
Sri Lanka has been mired in one of its worst economic crises for over a year due to the lack of foreign currency and high foreign debt, which triggered massive protests that forced the ouster of former president Gotabaya Rajapaksa in July 2022.
However, the discontent has failed to subside subsequently as part of the population feels that Gotabaya’s successor Ranil Wickremesinghe has also been unable to handle the economic debacle. EFE