Sri Lankan government to undertake major reforms to stabilise economy

Sri Lankan Treasury Secretary Mahinda Siriwardana said on Monday that the country will take steps to stabilise the economy, including strengthening public finance. Siriwardana made the remarks as the Sri Lankan government sent a delegation to the International Monetary Fund (IMF) to seek assistance. Figures show that around 125 billion Sri Lankan rupees ($384 million) of banknotes were printed in April and the government expenditure has also increased despite escalating foreign exchange shortages, Xinhua news agency reported.

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The government has to carefully manage resources and reduce the budget deficit as it has caused many problems across the economy, Siriwardana said. The official added that the government does not have enough revenues and that it is no longer in a position to get foreign loans.

"The entire deficit has to be financed domestically. Given that there are limited domestic resources, the central bank is compelled to find the money," he told reporters. The Sri Lankan government decided last week to suspend repayment for all debts for an interim period till it has an orderly and consensual debt restructuring programme supported by the IMF.

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