Sri Lanka seen returning to growth by year-end, president says

Sri Lanka's President Ranil Wickremesinghe arrives with commanders of three forces to attend the country's 75th Independence Day celebrations in Colombo, Sri Lanka February 4, 2023. REUTERS/Dinuka Liyanawatte

COLOMBO (Reuters) - Sri Lanka's economy is expected to grow again from the end of this year and the government wants the country to exit bankruptcy by 2026, President Ranil Wickremesinghe told parliament on Wednesday.

The Indian Ocean island of 22 million people has been struggling with its worst economic crisis since independence from Britain in 1948, which has forced it to default on loans and seek a $2.9 billion bailout from the International Monetary Fund.

Wickremesinghe said the government could turn around the economy if Sri Lankans tolerated high direct taxes for another six months. He said last month that the economy for the full year could contract by 3.5% or 4.0% after shrinking 11% last year.

Recent hikes in income taxes have hit salaried workers hard, with trade unions and private sector professionals staging protests in Colombo, the country's largest city.

Wickremesinghe said the aim was to reduce inflation to single digits by the end of the year. Sri Lanka's key inflation rate, the Colombo Consumer Price Index, eased to 54.2% in January from 57.2% in December.

(Reporting by Uditha Jayasinghe; Editing by Clarence Fernandez and Raju Gopalakrishnan)

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