Business Standard - August 23, 2022

Sri Lanka's 2023 budget would aim to reduce the fiscal deficit to 6.8 per cent in 2023 from the projected 9.9 per cent in 2022, a senior Cabinet Minister said on Tuesday, ahead of the visit by the IMF delegation for a bailout package to the crisis-hit island nation.

Sri Lanka is in the midst of an unprecedented economic crisis that has led to severe shortages of fuel and other essentials, leading to long serpentine queues in front of filling stations.

The island nation of 22 million also witnessed a significant political churn following massive mass protests that forced former president Gotabaya Rajapaksa to flee the country and resign from his post.

"Sri Lanka is planning to cut the budget deficit to 6.8 per cent of gross domestic product in 2023 from an expected 9.9 per cent in 2022," Bandula Gunawardena, the Cabinet spokesman and Minister of Information said on Tuesday.

The Cabinet of ministers has approved a fiscal framework for 2023-2025. Sri Lanka is facing the worst fiscal crisis in its history, he said.

We have to eventually bring down the deficit to 5 per cent of the GDP to manage debt, reduce money printing and have low inflation, Gunawardena said.

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