Lanka will slash defence expenditure, President says

There will be cuts in the defence expenditure in the coming interim budget, President Ranil Wickremesinghe has told Reuters in an interview on Thursday.Wicrkemesinghe said that overall state expenses would be slashed by a few hundred billion rupees, and these would be redirected to welfare and debt repayment.Sri Lanka would seek Japanese help on bilateral debt restructuring with the country’s main creditor nations, including China and India, he said.

“Someone needs to call in, invite the main creditor nations. We will ask Japan to do it,” President Ranil Wickremesinghe told Reuters.

The President added that he would travel to Japan next month to meet Japanese Prime Minister Fumio Kishida.Wickremesinghe said that Sri Lanka expectedan IMF facility between 2 billion and 3 billion US dollars.

An IMF delegation was expected to visit Sri Lanka by the end of August to reach a staff-level agreement. After Sri Lanka reached a staff-level agreement with the IMF, it had to start engaging with its creditors on debt restructuring, he said.The President also said that an interim budget will be presented in September. The budget will focus on fiscal consolidation measures agreed with the IMF, he added. A full budget will be presented in November and he will outline broader recovery plans, Wickremesinghe said.

“So, both those budgets will put out government policy. The first one on stabilization and the second one will look at recovery,” he told Reuters.

Wickremesinghe said he believes that the economy will see some recovery, in the second half of 2023. There will be a three percent revenue surplus by 2025, he said.

“I think we are restructuring to make Sri Lanka a very competitive, export-oriented economy,” he told Reuters.

Wickremesinghe has also said that he is not aware of any plans by former President Gotabaya Rajapaksa to return to the country in late August, as reported by some media.