Tax hikes, subsidy withdrawal will help pull Sri Lanka out of bankruptcy by 2026: Wickremesinghe

Sri Lanka's President Ranil Wickremesinghe on Wednesday said that the bankruptcy will last for three more years, as he works his way to repair the country’s finances. The president took office last year after the former president Gotabaya Rajapaksa was forced to resign and flee the country amid widespread protests. Inaparliament address, the president said, "If we continue according to this plan, we can rise out of bankruptcy by 2026."

His initiatives include tax hikes and negotiations with international creditors after a default on the country's foreign debt to clear its way for the IMF bailout, AFP reported.

The tax hikes and removal of fuel subsidies have been unpopular in the already crisis-hit country.

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But assuring the public, Wickremesinghe said, "Introducing new tax policies is a politically unpopular decision. Remember, I'm not here to be popular. I want to rebuild this nation from the crisis it has fallen into."

The South Asian island country has been in an economic crisis for over a year, which led to financial loans, violence and ousterof its former president over his mismanagement.

He also mentioned that though the country's GDP contracted by up to 11 per cent last year, it will be back to its position by the end of 2023.

Sri Lanka has reached the final stage of IMF discussions to secure a preliminary $2.9 billion bailout. This process has been delayed by protracted debt restructuring negotiations with China and other major creditors. Wickremesinghesaid that the country is in direct discussions with China regarding its outstanding debt and has received a positive response from all the parties and is working towards a final agreement.

(With inputs from agencies)

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