COLOMBO: Cash-strapped Sri Lanka’s president announced further tax hikes and sweeping reforms on Tuesday, saying that bailout talks with the International Monetary Fund were in the “final stage”.

The country of 22 million people has suffered months of dire shortages and protests culminating in the ouster of Gotabaya Rajapaksa last month.

Presenting a new budget, his successor Ranil Wickremesinghe said Tuesday that Value Added Tax (VAT) would rise from 12 to 15 percent for all goods and services from Thursday.

He said a dedicated debt management agency was being set up to restructure borrowings. In April, Colombo defaulted on its $51 billion external debt.

“Negotiations with the International Monetary Fund have successfully reached its final stage,” Wickremesinghe told parliament.

“Discussions on debt restructuring will be held with the main countries that provide loan assistance to our country,” he said referring to China, Japan and India, the top three creditors of the island.

Debt restructuring is crucial to clinching an agreement with the IMF, which resumed its talks with Colombo last week after political upheaval in July held up negotiations.

Beijing has not publicly shifted from its offer of issuing more loans rather than taking a haircut on existing credit.