Sri Lankan President Ranil Wickremesinghe arrives at the parliamentary complex in Colombo, Sri Lanka on Aug 3, 2022. (ERANGA JAYAWARDENA / AP)

COLOMBO - Sri Lanka's talks with the International Monetary Fund (IMF) on a bailout package have made solid progress, President Ranil Wickremesinghe said on Tuesday, presenting an interim budget to boost revenue and fight inflation.

The island nation of 22 million people is battling its worst economic crisis since independence from Britain in 1948. Wickremesinghe, who took over as the country's president last month, is pushing to bring in fiscal consolidation measures agreed with the IMF.

"We hope to start talks with creditors," Sri Lankan President Ranil Wickremesinghe told parliament, presenting his first budget, which officials hope will be followed by a preliminary, staff-level agreement with the IMF for a loan package worth between US$2 billion and US$3 billion

Negotiations with the IMF, which currently has a team of officials visiting Sri Lanka, have reached a "successful level", said Wickremesinghe, who also serves as finance minister.

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"We hope to start talks with creditors," he told parliament, presenting his first budget, which officials hope will be followed by a preliminary, staff-level agreement with the IMF for a loan package worth between US$2 billion and US$3 billion.

COVID-19 battered the island's tourism-reliant economy and slashed remittances from workers overseas. The damage was compounded by rising oil prices, populist tax cuts and a seven-month ban on importing chemical fertilizers last year that devastated agriculture.

The result has been chronic shortages of basic goods, runaway inflation and mass protests that forced then president Gotabaya Rajapaksa to flee the country, leaving his successor, Wickremesinghe, to handle the restructuring of billions of dollars in debt to China and other countries.

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