Sri Lanka new president to reallocate funds in interim budget

ECONOMYNEXT – Sri Lanka President Ranil Wickremasinghe, who is also the island nation’s finance minister, is expected to announce the interim revised 2022 budget with an aim to reallocate more funds for the poor and vulnerable people hit by the ongoing economic crisis.

The 2022 budget was originally presented by former finance minister Basil Rajapaksa who was forced to resign from the parliament on June 9. But that budget has not been implemented as announced due economic crisis and which later led to political crisis.

New President Wickremesinghe was was chosen by a parliament vote has said the 2022 development budget should have been changed to look into the poor and vulnerable people who are hard hit by the economic crisis.

“The interim budget will cut down capital expenses and reallocate for the vulnerable people,” a source who has the direct knowledge of the interim budget told Economy Next.

“It’s a hard choice. But there are many people who can’t even make their ends meet and have their daily meals. So the reallocation has become a necessary.”

Wickremesinghe already has raised value added tax (VAT)to 12% from 8%. Former president Gotabaya Rajapaksa who fled the country last month slashed the VAT to 8% from 15% in December 2019 to in a fiscal stimulus saying there was a persistent output gap.

However, economists predicted an economic collapse after Rajapaksa’s unprecedented move.

“The tax won’t be increased in the interim budget because it’s already raised,” the source said.

“But many reforms will be announced in the next year budget along with IMF loan.”