The government wants the country to exit bankruptcy by 2026, President Ranil Wickremesinghe tells Parliament.

Sri Lanka’s economy is expected to grow again from the end of this year and the government wants the country to exit bankruptcy by 2026, President Ranil Wickremesinghe has told Parliament.

The Indian Ocean island of 22 million people has been struggling with its worst economic crisis since its independence from Britain in 1948, which has forced it to default on loans and seek a $2.9bn bailout from the International Monetary Fund.

Wickremesinghe on Wednesday said the government could turn around the economy if Sri Lankans tolerated high direct taxes for another six months.

He said last month that the economy for the full year could contract by 3.5 percent or 4 percent after shrinking 11 percent last year.

Recent hikes in income taxes have hit salaried workers hard, with trade unions and private sector professionals staging protests in Colombo, the country’s largest city.

Wickremesinghe said the aim was to reduce inflation to single digits by the end of the year. Sri Lanka’s key inflation rate, the Colombo Consumer Price Index, eased to 54.2 percent in January from 57.2 percent in December.

Ex-president questioned over cash stash

Meanwhile, Sri Lankan police told AFP news agency on Wednesday they were investigating former President Gotabaya Rajapaksa over a hidden cash stockpile uncovered when protesters stormed his former residence last year.

Rajapaksa presided over the island nation’s economic crisis that saw people suffer through months of food, fuel and pharmaceutical shortages.

He fled the country last July after an angry mob besieged his compound – tendering his resignation from abroad days later – but has since returned and is living under armed guard.

Protesters occupied his presidential palace for several days, discovering 17.5 million rupees ($48,000) hidden in Rajapaksa’s private quarters that they later turned over to police.

Police investigators on Monday “recorded a three-hour long statement from the former president, Gotabaya Rajapaksa, on the cash found in the president’s house”, police spokesman Nihal Thalduwa told AFP.

A court in Colombo had ordered police to take a statement on the cash stockpile last November.

Thalduwa said the interrogation was part of an ongoing investigation, without giving further details.

Rajapaksa is part of a powerful political clan that has dominated Sri Lankan politics for decades.

He won a landslide election in 2019 after promising “vistas of prosperity and splendour” but saw his popularity nosedive as the country’s crisis worsened.

Protesters set up camp in his residence after he fled the country, frolicking in his pool and strolling around the compound’s lush gardens until they were ordered to leave by police.

Several corruption cases lodged against Rajapaksa stalled after he was elected president in 2019, giving him immunity from prosecution that he has since lost.

He also faces charges in a US court for his alleged role in the 2009 assassination of prominent newspaper editor Lasantha Wickrematunge, and the torture of Tamil prisoners at the end of the island’s traumatic civil war in 2009 while he was defence chief.

Critics accuse Wickremesinghe of being too close to his predecessor’s family and images of the pair chatting at a Buddhist festival on Sunday triggered outrage on social media.

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