Sri Lanka started a recent austerity drive on Monday, freezing authorities recruitment as new taxes and better electrical energy costs kicked in with authorities attempting to safe an IMF bailout.
The Indian Ocean island nation wants to realize debt sustainability as a precondition to a $2.9 billion bailout from the Washington-based lender after it defaulted in April as its financial system went into disaster.
The IMF has additionally requested Colombo to trim its 1.5 million robust public service, sharply elevate taxes and unload loss-making state enterprises.
A report 20,000 civil servants retired on the finish of December – eight instances as many as regular in response to the general public administration ministry – after President Ranil Wickremesinghe lowered their retirement age from 65 to 60.
They won’t get replaced, the ministry mentioned.
Doubled private revenue and company taxes kicked in on New Yr’s Day to shore up state income, whereas electrical energy costs went up 65% after a 75% tariff improve in August.
Mr. Wickremesinghe, who got here to energy after Gotabaya Rajapaksa fled the nation and resigned in July following months of protests, mentioned the disaster was not but over regardless of the restoration of gas, meals and fertiliser provides.
“Our issues haven’t been resolved but,” he instructed his employees on the primary working day of the 12 months.
“We have to cut back our debt burden if we’re to maneuver ahead.”
Key collectors resembling China and India are but to announce settlement to a “haircut” on their loans to the South Asian nation.
As a part of the brand new measures, the finance ministry has additionally banned non-essential capital expenditure.
Any officers who authorise investments over 500 million rupees ($1.38 million) with out clearing them with the treasury first might be held personally accountable, a Ministry official mentioned.
On the top of the financial disaster six months in the past, motorists spent days in lengthy queues to high up gas tanks whereas the nation endured 13-hour electrical energy blackouts and meals inflation hit almost 100%.