Facing crisis, Sri Lanka to cut spending 'to the bone'


People lining up for petrol in Sri Lanka - File pic

In an attempt to address the country’s worst-ever economic crisis, the prime minister of Sri Lanka says his government will be “cutting to the bone where possible.”

In an exclusive interview, Prime Minister Ranil Wickremesighne told Reuters the drastic moves will slash funding for infrastructure projects and cut food and fuel subsidies.

"We know it is going to be difficult that is why we are looking at relief, at least a two year relief program. There will be interim budget, where we will cut off all the development work, and put more money in, one is to ensure that we can pay the higher interest rates, and secondly to ensure that there is more money for the affected people. But that alone won't do."

He told Reuters the island will need assistance from other nations – particularly to ensure Sri Lanka has enough food.

To meet rising costs, Sri Lanka will print rupees.

"We have no rupee revenue, and now we have to print another trillion rupees. So, you can see how inflation will have an impact."

These moves will almost certainly push already-soaring prices higher and inflict even more pain on the population of 22 million people. - Reuters

Wickremesinghe said the country would soon appoint a new finance minister to lead negotiations with the International Monetary Fund for a loan package.

He also said he hoped any unrest would not get out of hand, telling Reuters that there will be "hard days ahead" and that protests are inevitable, adding "it's natural when people suffer, they must protest."

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