Sri Lanka’s parliament approves budget amid economic crisis

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Sri Lanka’s Parliament Approves Budget Amid Economic Crisis
Army soldiers patrol outside the Parliament building in Colombo, Sri Lanka, © AP/Press Association Images
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By Associated Press Reporter

Sri Lanka’s parliament has approved a budget that includes reforms aimed at improving the country’s finances as it attempts to recover from its worst economic crisis.

The 5.82 trillion rupee (£12.3 billion) budget includes a 43 billion rupee (£95.9 million) relief package for those affected by the crisis.

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The budget provides for a restructuring of state-owned enterprises, reduced subsidies for electricity, and tax increases to boost state revenue based on proposals by the International Monetary Fund (IMF) under a preliminary £2.3 billion bailout plan.


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The economic meltdown triggered a political crisis in which thousands of protesters stormed the official residence of the president in July (Rafiq Maqbool/AP)

Unsustainable government debt, a severe balance of payments crisis and the impact of the Covid-19 pandemic led to a shortage of essentials such as fuel, medicine and food, and soaring prices have caused severe hardships for most Sri Lankans. Many have lost their jobs because businesses have become unsustainable.

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The government announced in April that it was suspending repayment of nearly £5.7 billion in foreign debt due this year.

It has since entered a preliminary agreement with the IMF, which has agreed to provide £2.4 billion over four years depending on the willingness of Sri Lanka’s creditors to restructure their loans.

Sri Lanka’s total foreign debt exceeds £42.8 billion, of which £23 billion has to be repaid by 2027.

The economic meltdown triggered a political crisis in which thousands of protesters stormed the official residence of the president in July, forcing then-president Gotabaya Rajapaksa to flee the country and later resign.

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President Ranil Wickremesinghe, who succeeded Mr Rajapaksa, has somewhat reduced the shortages of fuel and cooking gas, but power outages continue, along with shortages of imported medicines.

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