IMF warns Sri Lanka trade unions against strike over pay demand

COLOMBO: Sri Lanka’s fragile economic recovery could be hampered by threatened trade union strikes over reduced benefits for government employees in this year’s budget, the International Monetary Fund warned on Tuesday.

Leftist President Anura Kumara Dissanayake’s maiden budget raised public sector salaries but also made deep cuts to longstanding perks in a continuing effort to repair the island nation’s tattered finances.

Sri Lanka’s main doctors’ union is considering a strike from Wednesday to protest against cuts to their allowances, while teachers are also considering stoppages.

IMF team leader Peter Breuer said the budget was the “last big push” for Sri Lanka’s austerity programme and said everyone who can “should make a sacrifice”.

“Sticking with the reforms is really the best way out for Sri Lanka to assure its sustainability,” Breuer told reporters.

“I think it’s important for everyone in Sri Lanka to recognise that,” he said. “This is the last budget where there is still a bit of an increase in revenues needed.”

Sri Lanka suffered an unprecedented economic crisis in 2022 that caused widespread shortages of food, fuel and other essentials.

The island nation secured a $2.9 billion bailout loan from the IMF in 2023, almost a year after defaulting on its $46 billion foreign debt.