Business & Economy

Sri Lanka orders more austerity measures pending IMF bailout

Colombo, Jan 31 (EFE).- Sri Lanka’s income is “far below” the expenses, the government said on Tuesday, calling for more austerity measures, pending a long-awaited approval of an International Monetary Fund (IMF) rescue plan.

The government ordered spending cuts, avoiding credit, and prioritizing salaries.

President Ranil Wickremesinghe, who holds the finance portfolio, has informed the cabinet that the revenue as of January 2023 is “far below” the expenditure.

“The government expenditure will have to be curtailed further/ postponed until planned revenue to be raised on the recent tax revisions is realized,” a presidential statement said.

“He (Wickremesinghe) noted that the general treasury will formulate a priority criterion for the purpose,” said the statement.

Wickremesinghe said it was a challenge for the treasury to meet all expenditures.

“Payment of salaries, pensions, welfare, medicine, and debt servicing will be given priority till the government has enough revenue.”

The measure follows another 5 percent budget cut order for all ministries made three weeks ago to stretch the meager reserves of the island nation, mired in the worst economic crisis in its history.

The Sri Lankan government is trying to stay afloat while waiting to comply with the IMF recommendations, which will allow it to access a $2.9-billion credit line long negotiated with the IMF.

Sri Lanka, last year, declared default on its foreign debt after the crisis left the island country without enough money to cover basic needs like fuel and medicine.

The situation triggered widespread street protests in 2022, with thousands of people calling for the resignation of the government of then-President Gotabaya Rajapaksa.

Overcoming the crisis is essential for Wickremesinghe, who has been in power on an interim basis after the resignation of Rajapaksa.

The former president announced on Monday his intention to run in the presidential elections scheduled for 2024. EFE


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