WEB DESK
Sri Lanka is set to unveil its debt restructuring plan later this month. State Minister of Finance Ranjith Siyambalapitya told reporters today about the government’s plans to reduce taxes and debt to GDP. Mr. Siyambalapitya said that the government will gradually lower taxes over the next five years, once revenue targets have been met. He also revealed that Sri Lanka’s debt burden is currently 128 percent of GDP which is to be brought down to 95 percent in the coming years. The government has set some difficult targets that are yet to be met, but the Minister is confident that the plan will succeed. He also highlighted the challenges of restructuring domestic debt without hurting financial stability. The announcement comes after the Central Bank’s debt restructuring strategy was delayed from April, with the finance minister’s assurance that a strategy is being formulated and will be presented within the month.
A senior International Monetary Fund (IMF) official had recently said that Sri Lanka has the potential to achieve debt sustainability and be put on the path to prosperity. However, they warned that it must confront the challenge of restructuring domestic debt without damaging financial stability. IMF had approved the 3 billion dollar bridge financing package in March this year after Sri Lanka had obtained financing assurances from its creditors. India was the first creditor nation to give financing assurances in line with IMF standards to restructure Sri Lanka’s debt.