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Sri Lankan president to cut spending in interim budget

Uditha Jayasinghe

COLOMBO (Reuters) – Sri Lanka’s president will cut spending when he presents an interim budget on Tuesday to see the crisis-ridden country through the rest of the year, in a deal with international When the IMF is discussing a bailout package.

This tourism-dependent country with millions is facing The worst economic crisis since independence, with foreign reserves collapsing, public finances in a mess, and the cost of basic goods soaring.

Ranil Wickremesinghe, who became president after his predecessor was ousted in a popular uprising in July, told Reuters earlier this month that the interim budget would focus on collaboration with the International Monetary Fund. Agreed fiscal consolidation measures.

He said spending would be cut by “hundreds of billions” of rupees, including defence, to channel welfare funds and repay loan interest. Sri Lanka’s target is 3.9 trillion rupees ($.18 billions of dollars) were spent in the last budget submitted in November.

Wickremesinghe, who is also finance minister, is expected to outline measures to support low-income communities hardest hit by the financial crisis and announce new taxes to shrink the double-digit deficit.

355 The full-year budget is likely to be presented in November, when a broader recovery plan will be outlined.

“The interim budget may target 2022 a deficit of 9.9%, lower than the previous 1948 ) %,” said Lakshini Fernando, macro economist at investment firm Asia Securities.

“But spending and income targets will be difficult to achieve given a cooling economy and welfare needs.”

The island nation missed June 3, June 28 and July 355 interest payments due , and according to rating Agency S&P Global (NYSE: SPGI ).

The IMF team that arrived in the country last week ended on Wednesday During the visit, Sri Lankan officials said they hoped to have a staff-at-large deal on an emergency loan of about $3 billion.

The IMF team also discussed restructuring Sri Lanka’s debt of about $3 billion 29 billion.

($1 = 355. Sri Lankan rupee)




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