IMF tells bankrupt Sri Lanka to tackle corruption, raise taxes

The IMF said more work was needed to set the nation's finances right and repair its runaway fiscal deficit before a deal could be struck on a funding arrangement.

Published: 30th June 2022 06:50 PM  |   Last Updated: 30th June 2022 06:50 PM   |  A+A-

Sri Lanka

Protestors participate in an anti-government demonstration outside the Galle International Cricket Stadium. (Photo | AFP)

By AFP

Sri Lanka should stamp out corruption and substantially raise taxes to rescue its economy, the International Monetary Fund said Thursday after bailout talks with the bankrupt island nation.

Representatives from the global lender of last resort have just concluded a 10-day visit to the capital Colombo to map out a resolution to the South Asian country's unprecedented economic crisis.

Their meetings follow months of lengthy blackouts and days-long queues for petrol as a financial crunch leaves Sri Lanka without the funds to meet its energy needs.

But the IMF said more work was needed to set the nation's finances right and repair its runaway fiscal deficit before a deal could be struck on a funding arrangement to address its balance of payments crisis.

"Given the low level of revenues, far-reaching tax reforms are urgently needed," the lender said in a statement.

Sri Lanka needed to "reduce corruption vulnerabilities", contain spiralling inflation and bring an end to costly energy subsidies that had long been a drain on the government budget without hurting more vulnerable citizens, the statement added.

ALSO READ | Sri Lanka to operate only essential services till July 10 amidst acute fuel shortage

"The authorities have made considerable progress in formulating their economic reform program and we are looking forward to continuing the dialogue with them," it said.

Sri Lanka has already reversed drastic 2019 tax cuts introduced by President Gotabaya Rajapaksa which have been blamed for precipitating the economic crisis.

It has also scaled back energy subsidies, with the cost of fuel rising by up to 400 percent this year, and in April the government defaulted on its $51 billion foreign debt.

Sri Lanka's 22 million people have laboured through chronic shortages of food,  pharmaceuticals and other essentials this year, and already severe hardships have worsened in recent weeks.

The island nation is almost completely without petrol and the government has shut down non-essential public services in an effort to conserve fuel.

The UN estimates that about 80 percent of the public are skipping meals to cope with food shortages and record prices.

Protests have demanded Rajapaksa's resignation for the government's mismanagement of the crisis, but the president has so far refused to stand down.


TAGS
Sri Lanka

Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp