Sri Lanka embarked on a new austerity campaign under which there will be no government hiring. New taxes and higher electricity prices were introduced in the island nations as authorities seek to secure an IMF bailout, AFP news agency reported. As one of the preconditions for securing the IMF’s $2.9 billion bailout is achieving debt sustainability, Sri Lanka has been bringing in new changes after the country defaulted in April when its economy entered in crisis
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The IMF had previously called on Sri Lanka to cut its 1.5 million-strong government jobs, raise taxes and sell off state-owned enterprises. A record 20,000 civil servants retired in December, eight times more than in previous years, according to the Ministry of Public Administration.
This happened after Sri Lankan President Ranil Wickremesinghe took the decision to lower the retirement age from 65 to 60.
Almost doubling of personal income and corporate taxes meant to boost state revenue began, while electricity prices rose by 65 percent, AFP reported. Ranil Wickremesinghe came to power after Gotabaya Rajapaksa fled the country and resigned in July after months of protests amid the country’s economic crisis.
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“Our problems have not been solved yet. We have to reduce our debt burden if we want to move forward,” said Ranil Wickremesinghe.
Sri Lanka has also banned non-essential capital expenditure amid new measures that will make officials who authorize investments above 500 million rupees without first clearing the treasury for them personally liable.
