Sri Lankan unions end strike after President Wickremesinghe offers talks

Sri Lanka's state-sector trade unions on Wednesday called off their daylong strike to protest against the envisaged tax reforms after President Ranil Wickremesinghe pledged to give them an opportunity to discuss the issue with the IMF which has set this as a precondition for a crucial bailout package.

The trade unions of doctors, ports, banks, electricity and teachers observed a day-long strike with the hope to convert it to a continuous protest action.

They want the government to roll back the high personal taxes which the government had claimed was a necessity as part of the reforms demanded by the IMF to unlock the USD 2.9 billion bailout package.

President Wickremesinghe's secretary Saman Ekanayake in a letter sent today to the doctors' trade union said: The Hon President has directed me to inform you that he wishes to continue the dialogue with the trade unions to resolve the issues

An opportunity would be provided to the trade unions to discuss tax reforms with the IMF," he said.

The trade unions collectively launched the strike opposing what they termed raising personal taxes on monthly incomes from 6 per cent to over 33 per cent.

We have been pledged direct talks with the president so we have decided to temporarily suspend our continuous strike action," Chamil Wijesinghe, the doctors' trade union spokesman, said.

Earlier in the day, the doctor's strike caused inconvenience at hospitals throughout the island as they only maintained emergency services. Schools remained shut as the students were turned away.

The railways said only 21 train services were operated during the peak hours due to the strike. Post offices were closed as the postal workers joined the strike. The banking sector was only partially operating.

The unions said they defied the essential services order issued by Wickremesinghe to scuttle the strike action.

Wickremesinghe maintains the tax reforms were necessary to revive the economy from the ongoing crisis.

The government has also earned the wrath for raising utility rates, triggering street protests by trade unions.

Wickremesinghe told Parliament that he was aware of the public hardships caused by the most essential reforms needed to revive the economy.

The IMF bailout process made slow progress due to the need to restructure Sri Lanka's nearly 50 billion dollar external debt.

By the end of June 2022, the debt-struck country owed nearly USD 40 billion to bilateral, multilateral, and commercial loans, according to the figures released by the Treasury.

Chinese loans amounted to 20 per cent of the total debt owed and 43 per cent of the bilateral loans.

In January, India strongly backed the island nation's efforts to secure a loan from the global lender to recover from its worst-ever economic crisis.

Sri Lanka in April last year declared its first-ever debt default in its history as the economic crisis since independence from Britain in 1948 triggered by forex shortages sparked public protests.

Months-long street protests led to the ouster of the then-president Gotabaya Rajapaksa in mid-July. Rajapaksa had started the IMF negotiations after refusing to tap the global lender for support.