Bankrupt Sri Lanka announced on Tuesday sharp government spending cuts and warned it had barely enough revenue to pay public salaries and pensions despite huge tax hikes.
The island nation has defaulted on its $46 billion public dept and is negotiating an International Monetary Fund (IMF) bailout after an unprecedented economic crisis last year brought widespread misery.
President Ranil Wickremesinghe ordered a five per cent reduction in state spending this week and his administration warned on Tuesday that welfare payments for 1.8 million families below the poverty line could be delayed this month.
“The president informed the cabinet yesterday that the economic crisis this year is going to be worse than what we expected,” government spokesman Bandula Gunawardana told reporters.
