Wickremesinghe Presented Sri Lanka’s Interim Budget Amid Economic Crisis

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Colombo: Sri Lanka’s interim budget has been presented on Tuesday amid the political and economic crisis. President Ranil Wickremesinghe presented the country’s interim budget in Parliament. 

Along with this, he said that the talks of the bailout package with the International Monetary Fund are in the final stages. Sri Lanka, battling economic crisis, presented an interim budget on Tuesday and unveiled measures to get a bail-out package from the International Monetary Fund (IMF). The Sri Lankan President said that the talks for this have reached their final stage.

The budget showed that the country’s deficit in the GDP of the year 2022 has increased from 8.8 percent to 9.8 percent amid a reduction in revenue tax and a sharp increase in expenditure. 

Unveiling the measures in Parliament, President Ranil Wickremesinghe said the government would aim to introduce legislation to curb inflation and strengthen central bank independence. 

According to news agency Reuters, Colombo-based investment firm CAL Group strategist Udishan Jonas said the government has undertaken substantial fiscal reforms, including a VAT hike in the interim budget as well as an income tax hike.

It is imperative that we use this opportunity to correct past mistakes and implement long-term policies that stabilize the economy and take us out of the challenges we face, Finance Minister Wickremesinghe said in the budget speech for talks with the IMF.

we are currently facing. Regarding this budget, Sri Lankan officials expect that they will get 2-3 billion dollars from the IMF. The revised budget estimates project revenue of 2 trillion Sri Lankan rupees ($5.6 billion) in 2022, down from the initial figure of 2.23 trillion. At present, one dollar in Sri Lanka is equal to 358 Sri Lankan rupees.

A total of Rs 4.4 trillion is expected to be spent in the coming times, which is much higher than the last estimate of Rs 3.9 trillion. The government’s primary deficit this year, essentially due to borrowing requirements excluding interest payments, is expected to fall to 4 per cent of GDP, though it fell to 5.7 per cent in 2021. 

Outlining measures to stabilize the crumbling economy, Wickremesinghe said he aims to bring down annual inflation to mid-single-digit levels, which are now over 66 per cent. New taxes will be introduced in the next full year’s budget, but the value-added tax will now increase from 12 per cent to 15 per cent from Thursday. 

Wickremesinghe said that in the medium term, Sri Lanka would aim to reduce the ratio of its debt to GDP from 100 per cent to 120 per cent now, with economic growth of 5 per cent.

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