Desperate for revenue, Sri Lanka imposed a hefty 18% value-added tax (VAT) on fuel, mobile phones, and computers starting Monday.

This comes alongside a similar increase in other consumer goods, previously at 15%.

The move aims to stabilize the island nation’s ailing finances as it grapples with its worst economic crisis in decades. Months of unrest over skyrocketing inflation and shortages culminated in the president’s resignation last July.

Wickremesinghe’s administration has resorted to austerity measures, with tax hikes and slashed subsidies complying with an International Monetary Fund (IMF) bailout. Government crackdowns on dissent have also drawn criticism.

The urgency stems from a looming deadline – May – to restructure Sri Lanka’s $46 billion external debt. The default in 2022 triggered the crisis, plunging the nation into chaos.

As negotiations with bilateral lenders and bondholders continue, the tax increases take effect. They are a bitter pill for many Sri Lankans struggling with daily needs, but a necessary step, the government hopes, to secure the IMF lifeline and set the country on a path to recovery.