Sri Lanka to present an Interim Budget in September which will focus on fiscal consolidation measures agreed with the International Monetary Fund (IMF).
Expenditure will be slashed by a “Few hundred billions” of Rupees to channels funds for welfare and to repay high interest rates, President Ranil Wickremesinghe told Reuters in an interview, adding that the cuts will include defence, which has retained the highest budgetary allocation.
The Interim Budget will be followed by a Full-year Budget for 2023, likely to be presented in November, where a broader recovery plan will be outlined.
“So, both those budgets will put out Government policy. The first one on stabilisation and the second one will look at recovery,” he said.
Overall, Wickremesinghe said he expects the economy, heavily reliant on tea and tourism, to see a recovery in the second half of 2023, reaching a revenue surplus of about 3 per cent by 2025.
“I think we are restructuring to make Sri Lanka a very competitive, export-oriented economy,” Wickremesinghe said.
Sri Lanka is negotiating with the IMF for a loan package worth between USD 2 billion and USD 3 billion.
Sri Lanka’s total bilateral debt was estimated at USD 6.2 billion at the end of 2020 by the IMF, according to a March report.
An IMF Team is expected to arrive in the country at the end of August to continue talks to reach a staff-level agreement.