Home World News Bankrupt Sri Lanka Says Treasury Running Dry, Cuts Spending

Bankrupt Sri Lanka Says Treasury Running Dry, Cuts Spending

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Bankrupt Sri Lanka Says Treasury Running Dry, Cuts Spending

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Last Updated: January 10, 2023, 16:29 IST

Sri Lanka is going through its worst economic crisis since its independence in 1948, triggered by a severe paucity of foreign exchange reserves.

(Reuters/Adnan Abidi/File Photo)

Sri Lanka goes by means of its worst financial disaster since its independence in 1948, triggered by a extreme paucity of overseas alternate reserves.

(Reuters/Adnan Abidi/File Photo)

The island nation has defaulted on its $46 billion public debt and is negotiating an International Monetary Fund (IMF) bailout after an unprecedented financial disaster final yr introduced widespread distress

Bankrupt Sri Lanka introduced on Tuesday sharp authorities spending cuts and warned it had barely sufficient income to pay public salaries and pensions regardless of enormous tax hikes.

The island nation has defaulted on its $46 billion public debt and is negotiating an International Monetary Fund (IMF) bailout after an unprecedented financial disaster final yr introduced widespread distress.

President Ranil Wickremesinghe ordered a 5 p.c discount in state spending this week and his administration warned Tuesday that welfare funds for 1.eight million households under the poverty line might be delayed this month.

“The president knowledgeable the cupboard yesterday that the financial disaster this yr goes to be worse than what we anticipated,” government spokesman Bandula Gunawardana told reporters.

Gunawardana said the government expected the economy to contract further this year after shrinking an estimated 8.7 percent in 2022.

“We will not get the projected tax revenue because this year too the economy will shrink,” he stated.

Sri Lanka wants to realize debt sustainability as a precondition to safe a $2.9 billion IMF mortgage.

The lender has additionally requested Colombo to trim its 1.5 million-strong public service, sharply elevate taxes and unload loss-making state enterprises.

Key collectors resembling China and India are but to agree upon a “haircut” on their loans to the South Asian nation, which has stalled Sri Lanka’s efforts to restructure its debt.

Doubled personal income and corporate taxes kicked in on New Year’s Day to shore up state revenue.

Electricity prices are also rising another 65 percent after a 75 percent tariff increase in August.

Sri Lanka’s 22 million people endured months of food and fuel shortages, chronic blackouts and runaway inflation last year, inflaming public anger.

Wickremesinghe came to power in July at the peak of the crisis after his predecessor fled the country when protesters stormed his residence.

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(This story has not been edited by News18 employees and is printed from a syndicated information company feed)

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