News

Eran takes govt. to task for errant policies

Published

5 years ago

2020/09/12

By Saman Indrajith

Samagi Jana Balavegaya MP Eran Wickramaratne warned in Parliament Thursday that Sri Lanka should prepare for its worst budget deficit in 35 years and the situation, which he said was due to the policy errors of the government.

“Expenditure increases during a health crisis but that is not what has happened. Capital expenditure came down during this period. The crisis has occurred due to the collapse in government revenue. This is the policy errors, which, he said, had to be rectified urgently. He was taking part in the debate on six notifications under the Ports and Airports Development Levy Act, three Orders under the Customs Ordinance and six Orders under the Revenue Protection Act presented to the House for approval by the government.

Wickramaratne said that under the previous government, Sri Lanka had achieved and improved fiscal position after several years with the budget deficit kept at 5.3 per cent of GDP during that period.

“This however began to deteriorate by the end of 2019 because of the government‘s irresponsible statement, in the run up to the election, on taxes and while the fiscal position has deteriorated, the situation has got progressively worse in 2020.

“Government revenue has declined by 28 per cent compared to 2019. Recurrent expenditure has increased by l0 per cent. The budget deficit has increased by 41 per cent. Development spending that is capital expenditure has decreased by -1.1 per cent. And the government debt has increased by Rs. 1.020 billion in just six months rising from 13,000 billion to over 14.000 billion from January to June in 2020.”

MP Wickramaratne said that the fiscal results would get worse as the year progressed with an additional cost of a 10 per cent increase in the government staff cadre.

The import ban would begin to hit government revenue in the second half. “Corporate taxes will be sharply down and Sri Lanka should prepare for its worse budget deficit in 35 years,” he said.

The SJB MP said that in spite of the reduction in tax relief to the public there had been no benefit felt by the people. “Prices of essentials have in fact increased despite the reduction and exemption in some taxes. Food price inflation reached 12.9 in July. The national consumer price index reached 6.1 per cent in July. These are not our statistics. These are statistics coming out of government departments,” he said.

MP Wickramaratne said the previous government had been able to rectify a regressive tax system. The direct “tax percentage was 25 per cent in 2019 and 75 per cent was indirect tax. When we took responsibility for the government, the direct taxes were only 12 per cent and we have been able to correct a regressive tax system taking away or lessening burden on the poor in this country.”

The external sector as a result of the poor fiscal management had also lost the opportunity in the global capital markets and the country was paying its external debt by running down the reserves. By the middle of 2019, the government reserves had been USD 859 billion, Wickremaratne said. But within one year in June 2020, the reserves were USD 6.7 billion. Therefore, there were major debt repayments. In 2020, 2021 and 2022, Sri Lanka would have to pay mainly on sovereign bonds. Sri Lanka had another USD 4 billion debt maturing in 2020 and 2024.

The country’s debt was about 87 per cent of GDP and of this 57 per cent of was foreign debt, non-concessional as opposed to only 2.5 per cent, 15 years ago, Wickramaratne said, adding that most of the non-concessional borrowings of 75 per cent equal to US Dollars 15.3 billion were international sovereign bonds. “China has now displaced Japan as the largest bilateral creditor to Sri Lanka amounting to 12.4 per cent of government debt. Out of $ 4.1 billion of Chinese lending to Sri Lanka, only $ 760 million are classified as official bilateral debt. The rest are considered as commercial.”

MP Wickramaratne said that external debt in Sri Lanka was predominantly by the public sector and very high in relation to current account receipts. The pressure would intensify in 2020, when current account receipts would fall sharply amidst the down turn in tourism, exports, remittances and capital markets financing costs as they go up.”

He added that the government had an issue with State-Owned Enterprises (SOEs) particularly as they had issued guarantees to the Ceylon Petroleum Corporation (CPC), the Road Development Authority (RDA), the National Water Supply and Drainage Board, Ceylon Electricity Board (CEB) and SriLankan Airlines. “SOEs like CEB CPC and SriLankan Airlines are problematic for every government and therefore, we need to restructure the debt. Giving government guarantees is only manhandling the data, making the government look good.” Eventually that risk is not a contingent liability.

Wickramaratne charged that the government had mishandled the fiscal part at the beginning and then turned to the Central Bank and wanted the CB to do something about the monetary space.

“Despite the fact you forced out two members of the Monetary Board, Dr. Dushni Weerakoon and Nihal Fonseka, and despite the threat to senior members in the CB, it is not a matter of people, it is a matter of policy that you need to correct. They have done their utmost. They have provided the liquidity, but the credit growth in May, June and July has been negative. It cannot be solved only on the monetary side because you have little space on the fiscal side.”

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Heat Index at Caution Level in the Western, Sabaragamuwa and North-western provinces and Monaragala district.

Published

4 hours ago

2026/03/10

Priyan

Warm Weather Advisory issued by the Natural Hazards Early Warning Centre of the Department of Meteorology at 3.30 p.m. on 09 March 2026, valid for 10 March 2026.

The public are warned that the Heat index, the temperature felt on the human body is likely to increase up to ‘Caution level’ at some places in Western, Sabaragamuwa and North-western provinces and in Monaragala district.

The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body.

This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.

Effect of the heat index on the human body is mentioned in the above table and it is prepared on the advice of the Ministry of Health and Indigenous Medical Services.

ACTION REQUIRED
Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated.
Dress: Wear lightweight and white or light-colored clothing.

Note:
In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491.

News

Prof. Dunusinghe warns Lanka at serious risk due to ME war

Published

6 hours ago

2026/03/10

Sahan Weerasooriya

Prof. Priyanga Dunusinghe

Prof. Priyanga Dunusinghe has warned that Sri Lanka could face a catastrophic situation due to a rapid and sharp drop in revenue caused by the escalating Gulf war.

Appearing on Derana ‘Big Focus’ yesterday, the Professor in Economics in the Department of Economics, and Head – Department of Information Technology, University of Colombo, Dunusinghe said that that drop in remittances from the Middle East, as well as exports, should be examined against the backdrop of runaway oil prices.

Dunusinghe said so responding to interviewer Pasan de Silva who sought expert opinion on the crisis. Referring to continuing Iranian retaliatory attacks on Gulf countries hosting US military bases, the academic pointed out that approximately one million Sri Lankans were employed in the region.

Global oil prices rose to over $100 per barrel on 08 March, for the first time since the Russia-Ukraine war erupted in February 2022. By noon prices were around USD 115 per barrel.

If a consensus couldn’t be reached soon, the consequences for Sri Lanka would be devastating, Dunusinghe said, suggesting that the government should seriously consider, what he called, a relatively small but immediate fuel hike to cushion the impact of future fuel price hikes.

Dunusinghe explained that in addition to the drop in remittances from the Middle East, Sri Lanka could lose employment opportunities in the war devastated region. Responding to the interviewer, the Prof said that if the situation further deteriorated the government would have to face the daunting challenge of evacuating Sri Lankans from the Middle East.

Referring to the devastating impact of Cyclone Ditwah, Dunusinghe pointed out that in terms of the agreement with the IMF, finalised in 2023, the debt repayment would have to be recommenced in 2028. The new Middle East war has placed the country in an extremely difficult situation, Dunusinghe said, while emphasising the responsibility on the part of the government to address the issues at hand immediately.

The rapidly changing oil markets indicated that regardless of optimism expressed by the US and Israel of swift victory, the ground realities were quite different, the academic said.

By Shamindra Ferdinando

News

Power sector restructuring completed; new state-owned entities established: Govt.

Published

6 hours ago

2026/03/10

Sahan Weerasooriya

The NPP governmnet has completed a major restructuring of its power sector, marking one of the most significant transformations in the country’s electricity industry in recent times, Minister of Power and Energy Engineer Kumara Jayakody says.

Addressing directors and senior officials of the newly established institutions in the power sector, while also connecting with employees of the new entities, via Zoom, the Minister said the restructuring programme had now been fully implemented with the objective of strengthening the sector, while ensuring continued state ownership.

Jayakody said the reforms represented a decisive step towards building a stronger and more resilient electricity sector, capable of meeting both present and future challenges facing the country.

“We have completed the restructuring programme that marks one of the biggest transformations in Sri Lanka’s power sector. Let us work together with dedication and commitment, within the newly established institutions, to realise the dream of ‘a prosperous country and a beautiful life,’” the Minister said.

The Minister stressed that the current government had reversed earlier attempts, by the previous administration, to break up the Ceylon Electricity Board (CEB) into 12 entities, as part of a privatisation drive.

Instead, he said, the government had established several new companies that would remain 100 percent state-owned, thereby safeguarding public ownership of the electricity sector, while introducing the structural reforms needed to modernise and strengthen the industry.

According to Jayakody, the restructuring initiative was carefully designed to ensure that the electricity sector would remain under state control while being equipped with the institutional capacity required to address emerging energy demands, technological changes and economic pressures.

He noted that one of the government’s key priorities, during the reform process, had been the protection of employee rights and privileges.

“As a government representing working people, we paid special attention to protecting the rights and benefits of employees. We assure you that the privileges and rights enjoyed by you as CEB employees will continue without even the slightest reduction when you join the new institutions,” the Minister said.

He added that the government had also taken steps to address long-standing grievances raised by employees and trade unions in the power sector.

Jayakody said many of the demands made by workers over the years had now been fulfilled, including some that had not yet been formally requested by unions or employee representatives.

“Many of the issues raised by workers in the past have now been resolved. In some instances, the government moved to address concerns even before they were formally requested by employees or trade unions,” he said.

The Minister also noted that throughout the restructuring process, the government had maintained a regular dialogue with trade unions representing workers in the electricity sector.

He said the authorities had held discussions with union representatives on several occasions and listened to their concerns before finalising key aspects of the restructuring programme.

Jayakody emphasised that the establishment of the new institutions represented a significant milestones in the development of Sri Lanka’s electricity sector.

“At this important moment, when a major step is being taken towards the development of the country’s power sector, I invite all of you to treat this as a national mission and make the fullest use of the opportunities available within these new institutions,” he said.

The Minister also expressed his appreciation to all those who had contributed to the successful completion of the restructuring programme.

He said the transformation of the electricity sector had required the cooperation and commitment of many stakeholders, including officials, employees and policymakers.

Energy sector analysts say the restructuring of the power sector is expected to play a critical role in improving efficiency, governance and long-term planning in electricity generation, transmission and distribution.

Sri Lanka’s electricity industry has faced several challenges in recent years, including rising fuel costs, supply disruptions and the need for increased investment in renewable energy and grid infrastructure.

Officials say the new institutional framework is expected to enhance operational efficiency while ensuring that the strategic assets of the electricity sector remain under state ownership.

The government maintains that the restructuring programme will ultimately strengthen the country’s energy security while supporting broader economic development.

By Ifham Nizam