COLOMBO – The crisis-hit Sri Lankan economy can turn around by the end of 2023 if budget policies, which are not limited to the International Monetary Fund’s (IMF) recommendations, are followed, President Ranil Wickremesinghe said in the budget speech on Monday.

The IMF recommendations have been looked at only to stabilise the economy, Mr Wickremesinghe, who is also the country’s Finance Minister, told Parliament, delivering the first annual budget since he took office in July.

The budget is likely to include specific measures aimed at reducing the government’s deficit and persuading the IMF to provide a desperately needed bailout package.

Mr Wickremesinghe said the government plans to reduce debt to less than 100 per cent of gross domestic product (GDP) over the medium term and achieve economic growth of 7 per cent.

He said public revenue is expected to rise to 15 per cent of GDP by 2025 from 8 per cent currently, with export and foreign direct investment targets of US$3 billion (S$4.1 billion) each over the medium term.

Soaring inflation, a weakening currency and low foreign exchange reserves have left the island of 22 million people struggling to pay for imports of essentials such as food, fuel and medicine.

Mass unrest forced the last government of president Gotabaya Rajapaksa and prime minister Mahinda Rajapaksa out of power, and the island nation remains vulnerable to political instability as fears of a global recession have added to the dire economic problems for an economy that suffered a catastrophic contraction.

Investors were expecting the government to announce proposals to increase taxes and also change tax slabs, despite criticism from corporates and opposition parties. REUTERS