Colombo:Sri Lanka on Tuesday announced further measures to tighten its finances ahead of reaching an agreement with its main creditors on the anticipated IMF bailout expected in the island nation's ongoing economic crisis caused by forex shortages. Cabinet spokesman Bandula Gunawardena said that a further one per cent cut from the budgetary allocations of each government ministry would be slashed.
The money is to be added to the ministry of health allocation to purchase urgent medicine. The medicine supplies have run dry due to the forex crisis despite international assistance being received. Last week the government proposed a five per cent cut from all ministry allocations. Due to a shortfall of government revenue, we have taken measures to cut spending. Public salaries, pensions and welfare activities must continue despite hardships," he said.
Gunawardena said the state revenue is expected to rise this year with the proposed tax reforms introduced. In another tightening measure, the Cabinet has approved a proposal to pay the public salaries in two stages. The lower-grade staff would be paid on time while the higher grades would be paid a few days later. He was hopeful that a final agreement with the International Monetary Fund (IMF) on the USD 2.9 billion bailout package could be reached before the end of March.