Sri Lankan Cabinet approves new measures to facilitate economic recovery

Sri Lanka's government has approved several measures, including imposing a 2.5 per cent social contribution tax on companies and declaring Fridays as holidays, to facilitate the economic recovery

Ranil Wickremesinghe, Sri Lanka PM
Sri Lanka PM Ranil Wickremesinghe
Press Trust of India Colombo
2 min read Last Updated : Jun 15 2022 | 2:08 AM IST

Sri Lanka's cash-strapped government has approved several measures, including imposing a 2.5 per cent social contribution tax on companies based on their turnover and declaring Fridays as holidays for most public sector employees, to facilitate the economic recovery and mitigate energy and food crisis.

Sri Lanka is currently facing its worst economic crisis since independence from Britain in 1948.

The economic crisis has prompted an acute shortage of essential items like food, medicine, cooking gas and other fuel, toilet paper, and even matches, with Sri Lankans being forced to wait in lines lasting hours outside stores to buy fuel and cooking gas.

Sri Lanka's Cabinet at a meeting held on Monday approved a bill to impose a 2.5 per cent tax on companies with an annual turnover of Rs 120 million.

The new tax named the social contribution levy will be applicable to businesses in imports, manufacturing, service providers, wholesalers and retailers, according to an official statement.

In another measure aimed at mitigating the ongoing energy crisis, the Cabinet has approved to declare Fridays as holidays for the public sector employees.

This, however, would not be applicable to the employees in the health, power and energy, education and defence sectors.

The Cabinet also approved a move to grant government officials one leave per week for the next three months to engage in agriculture to mitigate the approaching food crisis.

Sri Lanka is experiencing long queues for refuelling at pumping stations as the government finds it difficult to finance fuel imports to retain a reserve adequate for a minimum of three months.

A move to ration fuel is to be implemented from next month as the forex crisis gets worsened.

The nearly bankrupt country, with an acute foreign currency crisis that resulted in foreign debt default, announced in April that it is suspending nearly USD 7 billion foreign debt repayment due for this year out of about USD 25 billion due through 2026.

Sri Lanka's total foreign debt stands at USD 51 billion.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

More From This Section

Topics :sri lankaEconomic Crisis

First Published: Jun 14 2022 | 12:49 PM IST

Next Story