Sri Lanka’s proposed budget aims to restore its failing economy

• Sri Lanka unveils a budget attempting to put the South Asian government’s finances in order.
• More than 70% of families are asking the government for support.
• The 22 million-person country entered a crisis this year.

On Monday, Sri Lanka unveils a budget attempting to put the South Asian government’s finances in order, with reforms to advance a $2.9 global billion bailout from the island’s worst financial crisis since its independence in 1948.

Analysts predict that the first full-year budget presented to parliament by President Ranil Wickremesinghe will include initiatives to assist Sri Lanka in restructuring its debt, increasing income, and cutting spending as it negotiates a bailout with the International Monetary Fund.

“This is a budget that is being presented at a time Sri Lanka is facing an unprecedented crisis,” said State Minister for Finance Ranjith Siyambalapitiya.

“More than 70% of families are asking the government for support and the economy is estimated to shrink 8.3% this year,” he added.

“This budget will present a political and economic way forward for the country.”

According to the World Bank, Sri Lanka’s economy will decrease by 9.2% this year and 4.3% in 2023.

The 22 million-person country entered a crisis this year as a result of chronic dollar shortages brought on by tax cutbacks, years of poor economic management, and a loss of tourism earnings brought on by the Covid-19 outbreak.

Sri Lanka struggled to purchase necessities like fuel because it was unable to pay for crucial imports.

Despite objections from businesses and parties, the government has suggested raising the personal and corporate income tax rate from 24% to 30% and possibly modifying tax bands to increase revenue.

Spending cuts will likely to be tricky, given Sri Lanka’s large public workforce and high debt.

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