Sri Lanka raises taxes, pledges aid in crisis budget

Colombo, Aug 30 (EFE).- Sri Lanka is set to raise indirect taxes and distribute millions of rupees in aid to the people worst affected by the ongoing economic crisis, President Ranil Wickremesinghe said on Tuesday while presenting the interim budget.

Wickremesinghe said that the value added tax would be hiked from 12 to 15 percent from Thursday in an attempt to raise collection after the earlier government of former president Gotabaya Rajapaksa reduced taxes, leading to losses worth billions of dollars.

“We have directed around 300 billion rupees (around $824 million) for capital expenditure and less priority spending, allocated in the original budget 2022, including the provision of relief to those who are affected by the economic crisis,” Wickremesinghe told the parliament.

The measures include a monthly stipend of 10,000 rupees until December to 61,000 families facing food insecurity, apart from a program to incentivize unemployed youth to use government lands for “export-oriented” agriculture and livestock rearing.

“Some people in our country still do not have a real understanding of the severity” of the economic crisis, the president said.

He added that the government would seek to reduce the number of public employees through an early retirement scheme for those over the age of 60.

The interim budget was presented even as the police dispersed a students’ protest in Colombo with teargas, as part of a series of demonstrations that have rocked the country in recent months.

Sri Lanka has been facing the worst economic crisis in its history, partly owing to a foreign currency shortage and the resultant severe shortfall of fuel and basic necessities.

The crisis sparked protests across the country, forcing then-President Gotabaya Rajapaksa – accused of corruption and mismanagement – to flee the country, and the appointment of Ranil Wickremesinghe as the new president.

Last week, Colombo resumed negotiations with the IMF to conclude an urgent bailout program worth $4 billion to restore fiscal balance.

On Tuesday, Wickremesinghe told the parliament that the negotiations were in their final phase. EFE

aw-daa/ia