COLOMBO (Reuters) – Sri Lankan President Ranil Wickremesinghe will on Tuesday slash defence and other expenditures in a bid to win International Monetary Fund (IMF) support as he presents his first budget since taking over as leader of his crisis-hit country.

Officials hope the interim budget for the rest of the year will be followed by a staff-level agreement on extending much-needed IMF help for Sri Lanka to tackle its worst economic turmoil since independence from Britain in 1948.

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 the import of chemical fertilisers last year that devastated agriculture.

The result has been chronic shortages of basic goods, sky-high prices and mass protests that forced President Gotabaya Rajapaksa to flee the country, leaving his successor, Wickremesinghe, to handle restructuring billions of dollars in debt to China and other countries while seeking a bailout from the IMF.

Six-time prime minister Wickremesinghe, who holds the finance portfolio, told Reuters this month that expenditure would be slashed by a “few hundred billion” rupees, including on defence, in the budget he will present to parliament.

Sri Lanka aimed for 3.9 trillion rupees ($11 billion) in expenditure in its last budget, presented in November.

Wickremesinghe is also expected to outline measures to support low-income communities worst hit by the crisis and announce new taxes to shrink its fiscal deficit.

The deficit target is likely to be reduced from about 12% of gross domestic product to 9.9% in the interim budget but analysts warn this is an ambitious goal since the economy is projected to contract by an estimated 8% this year.

“A long-standing problem is budgets don’t meet revenue and deficit targets so this budget will have to really focus on proper revenue-based fiscal consolidation,” said Shehan Cooray, head of research at Acuity Stockbrokers.

“The key things will be the budget deficit and primary deficit targets, which will be in line with an IMF plan.”

The nation of 22 million missed interest payments due on June 3, June 28, and July 18, and a principal payment due on July 25, according to rating agency S&P Global.

An IMF team that arrived last week concludes its visit on Wednesday, and Sri Lankan officials hope to have a staff-level agreement in place to advance talks for an emergency loan of about $3 billion.

($1 = 355.0000 Sri Lankan rupees)

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