The Sri Lankan Cabinet on Monday, 13 June, approved various measures to mitigate the energy and food crises, amidst the ongoing economic crisis in the country.
These measure include the imposition of a 2.5 percent social contribution tax for companies with a turnover of over Rs 120 million, and declaring Fridays a holiday for most public sector employees.
Sri Lanka currently faces its worst economic crisis since independence from the British 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.
The Sri Lankan population is experiencing long refuelling queues with the government struggling to finance imports of fuel required to retain a reserve adequate for a minimum of three months.
The Cabinet's Decisions
The Cabinet, during a meeting on Monday, approved a bill imposing a 2.5 percent tax on companies with an annual turnover of Rs 120 million. The social contributor tax will be applicable to businesses in manufacturing, imports, service providers, retailers and wholesalers.
Moreover, to mitigate the energy crisis, the Cabinet approved a move to declare Friday as a holiday for people working in the most public sector positions. This would, however, not be applicable to those working in health, education, defence, and power and energy sectors.
The Cabinet further approved a step which grants government officials one leave per week, to engage in agriculture and fend off the approaching food crisis, for the next three months. The country will also implement a move to ration fuel 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 $7 billion foreign debt repayment due for this year out of about $25 billion due through 2026.
Sri Lanka's total foreign debt stands at $51 billion.
(With inputs from PTI)
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