Colombo: Sri LankaThe president is set to cut spending as he presents an interim budget on Tuesday to see the beleaguered country through the rest of the year, amid discussions with the president International Monetary Fund relief package.
The tourism-dependent nation of 22 million is facing its worst economic crisis since independence in 1948, with foreign exchange reserves crashing, public finances messed up and the cost of basic goods soaring.
After becoming president after his predecessor was ousted in a popular uprising in July, Ranil Wickremesinghe told Reuters earlier this month that the interim budget would focus on fiscal consolidation measures that had been agreed International Monetary Fund,
He said a reduction of “a few hundred billion” would be made, including expenditure on defense, to channel money for welfare and repay interest on loans. In its last budget presented in November, Sri Lanka had set a target of spending 3.9 trillion rupees ($10.99 billion).
Wickremesinghe, who is also the finance minister, is expected to outline measures to support the low-income communities most affected by the financial crisis and announce new taxes to reduce the double-digit deficit.
A full-year budget for 2023 is likely to be presented in November, where a comprehensive recovery plan will be outlined.
“The interim budget will target a deficit of 9.9% for 2022, which is down from the earlier 12%,” it said. laxmi fernandoMacroeconomist at Investment Firm Asia Securities,
“But the expenditure and revenue targets will be difficult to achieve given the cold economy and welfare demands.”
According to rating agency S&P Global, the island nation did not make interest payments on June 3, June 28 and July 18 and principal payments on July 25.
An IMF team that arrived in the country last week ends its visit on Wednesday, with Sri Lankan officials saying they expect an employee-level agreement to move forward talks for an emergency loan of about $3 billion .
The IMF team has also discussed the restructuring of Sri Lanka’s debt of about $ 29 billion.
($1 = 355.0000 Sri Lankan Rupee)
The tourism-dependent nation of 22 million is facing its worst economic crisis since independence in 1948, with foreign exchange reserves crashing, public finances messed up and the cost of basic goods soaring.
After becoming president after his predecessor was ousted in a popular uprising in July, Ranil Wickremesinghe told Reuters earlier this month that the interim budget would focus on fiscal consolidation measures that had been agreed International Monetary Fund,
He said a reduction of “a few hundred billion” would be made, including expenditure on defense, to channel money for welfare and repay interest on loans. In its last budget presented in November, Sri Lanka had set a target of spending 3.9 trillion rupees ($10.99 billion).
Wickremesinghe, who is also the finance minister, is expected to outline measures to support the low-income communities most affected by the financial crisis and announce new taxes to reduce the double-digit deficit.
A full-year budget for 2023 is likely to be presented in November, where a comprehensive recovery plan will be outlined.
“The interim budget will target a deficit of 9.9% for 2022, which is down from the earlier 12%,” it said. laxmi fernandoMacroeconomist at Investment Firm Asia Securities,
“But the expenditure and revenue targets will be difficult to achieve given the cold economy and welfare demands.”
According to rating agency S&P Global, the island nation did not make interest payments on June 3, June 28 and July 18 and principal payments on July 25.
An IMF team that arrived in the country last week ends its visit on Wednesday, with Sri Lankan officials saying they expect an employee-level agreement to move forward talks for an emergency loan of about $3 billion .
The IMF team has also discussed the restructuring of Sri Lanka’s debt of about $ 29 billion.
($1 = 355.0000 Sri Lankan Rupee)