Sri Lanka’s president will decrease the interim budget: As talks with the International Monetary Fund on a rescue package continue. The president of crisis-ridden Sri Lanka plans to reduce spending when he delivers an interim budget on Tuesday.
The 22 million-strong, heavily dependent-on-tourism country is experiencing its most significant economic crisis since gaining independence in 1948, with its foreign currency reserves collapsing. Its governmental finances in disarray, and the prices of essential products skyrocketing.
Ranil Wickremesinghe, who took office after his predecessor was overthrown in a popular revolt in July, said earlier this month. That the interim budget would centered on fiscal consolidation measures agreed upon with the IMF.
He said that spending would reduce by “a few hundred billion” rupees. Including on defense, to direct money toward welfare and pay off loan interest. In its most recent budget, unveiled in November, Sri Lanka set a spending goal of 3.9 trillion rupees ($10.99 billion).
In addition to announcing new levies to reduce a double-digit deficit, Wickremesinghe, who doubles as the finance minister, anticipated to unveil plans to assist low-income areas affected the hardest by the financial crisis.
A more comprehensive recovery plan will provide in November, along with the full-year budget for 2023.
The interim budget expect to aim for a 9.9% deficit in 2022, down from the previous 12%. According to macroeconomist Lakshini Fernando of the investment company Asia Securities.
However, given the weakening economy and welfare needs, meeting the spending and income objectives would be challenging.
According to rating agency S&P Global, the island skipped principal payments due on July 25 and interest payments due on June 3, June 28, and July 18.
Officials from Sri Lanka said they aim to have a staff-level agreement to begin discussions for an emergency loan of around $3 billion by the time an IMF delegation leaves the country on Wednesday.
The IMF delegation reviewed the approximately $29 billion in debt owed by Sri Lanka.
