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Prez insists on IMF approved new tax regime, warns of dire consequences unless fully implemented

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President Ranil Wickremesinghe, in a televised statement yesterday (18), warned that Sri Lanka wouldn’t be able to obtain assistance of the IMF, or any other lending agencies, or countries, if tough new tax regime was not implemented.

The President said: “If we withdraw from this programme, we will not receive assistance from the IMF. If we don’t get the IMF certification, we will not get the support of those international institutions, such as the World Bank, and Asian Development Bank, and the countries that provide support. If that happens, we will have to go back to the era of queues.

“We may have to face even tougher times ahead. We have to obtain these loans and go for the debt-restructuring programme. We are not doing these wilfully. We have to take certain decisions, even reluctantly.

“However, we will reconsider these decisions periodically.”

The following is the full text of the President’s statement: “An important step in Sri Lanka’s debt restructuring program took place last week. A team under our Minister of State for Finance participated in the annual (October 07) meeting of the International Monetary Fund. Accordingly, a meeting was held under the leadership of the International Monetary Fund, with the countries that had given loans to Sri Lanka and some private institutions that had also given loans.

Over 75 persons participated directly or through zoom technology. The primary purpose of this was to come to a common platform with the 03 main countries that have granted loans to Sri Lanka, namely Japan, China and India, and discuss the next steps to be taken to provide these concessions.

During this meeting, the International Monetary Fund and Sri Lanka pointed out the need for a common platform. India and China have informed us that they will investigate further and provide answers. These two countries have also informed us that bilateral discussions may be required.

Many other countries also participated in this meeting. It is notable that, an Assistant Secretary of the United States Treasury came here. All this was possible because we are implementing the decisions taken in consultation with the International Monetary Fund.

There is one thing about the income of the Government of Sri Lanka. In 2015, when the representatives of the International Monetary Fund came to Sri Lanka, we were told of the need for a surplus in the primary budget. Therefore, we provided that surplus in 2017-2018. But it was reduced as a result of the 2019 Easter Sunday bombings. However, there were no serious issues. They were optimistic that we would be able to increase our revenue, to have a surplus in the primary budget.

At the time, our income was between 14.5% and 15% of the Gross Domestic Product (GDP). However, we agreed that we can gradually increase this to 17%-18%.

However, in November 2019, the country’s taxes were drastically reduced. Then the government revenue decreased to 8.5%. There, the International Monetary Fund declared that it is unable to provide aid because of these agreements.

That year we lost around Rs. 600-700 billion. Simultaneously, we had to face the Covid pandemic. These issues are the main factors that led to the collapse of Sri Lanka’s economy.

The International Monetary Fund notified us that we need to show a surplus in our primary budget. We agreed to it because we needed their support.

The other factor is that it was decided to increase the country’s income from 8.5% to 14.5% of the GDP. It’s impossible to do it all at once. We have planned to increase the country’s income to 14.5% of the GDP by 2026.

Initially, we had to think about how we were going to increase our income. We have printed money because our income decreased. During the past two years, Rs. 2300 billion has been printed. As a result, inflation has risen to 70% – 75%. Food inflation has increased even more.

These need to be controlled, but we also need to secure our income. Therefore, a new tax system was proposed during these discussions. The International Monetary Fund had notified that even the export industries are required to pay taxes.

It was indicated especially in countries with an export economy, taxes are being paid. The IMF also pointed out that our primary export economy was the plantation industry. During British rule, taxes were charged from every plantation sector, including tea, coconut and rubber. Therefore, we decided that if we are to move towards that goal, we will have to pay taxes. The export sector has now questioned this move and if these facts are to be submitted to the International Monetary Fund, we have discussed carrying out an analysis.

The second matter is individual taxes. We have obtained the majority of taxes through indirect taxing. Even the majority of the country’s people below the poverty line had no choice but to pay taxes indirectly. Our direct tax revenue is 20%. 80% which was derived from indirect taxes. The International Monetary Fund had specific questions about it and they were of the view that the amount of tax obtained from direct taxes should exceed 20%. Otherwise, they noted that this would not be successful, as ordinary citizens would be forced to pay taxes.

Therefore, according to this mechanism, and to achieve the goals of 2026, the treasury and the International Monetary Fund discussed the possibility of limiting the taxation from those who have an income of 02 lakhs, but that was not possible. Eventually, income tax was levied on people earning over 100,000. Today, this has become a huge problem in the country.

I would like to point out that based on this backdrop, we may not be able to achieve the desired goals without this tax system. The desired goal is to achieve 14.5% – 15% gross domestic product (GDP) revenue by 2026.

If we withdraw from this program, we will not receive assistance from the IMF. If we don’t get the IMF certification, we will not get the support of those international institutions such as the World Bank, and Asian Development Bank, and the countries that provide support. If that happens, we will have to go back to the era of queues.

We may have to face even tougher times ahead. We have to obtain these loans and go for the debt-restructuring program. We are not doing these wilfully. We have to take certain decisions even reluctantly. However, we will reconsider these decisions periodically.

While successfully conducting our debt restructuring program, we expect to move forward through the economic success achieved through a bountiful Maha season. This will help reduce our economic pressure. We have also discussed measures to increase our foreign reserves. Once we have implemented these measures, we can move forward.

We are in a difficult period. We will have to make tough decisions during these difficult times. I took on this difficult task when no one else was willing to come forward. Hence, I feel I must enlighten everyone regarding this background. The government is ready to discuss this further.



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Suspects involved in sureties controversy granted bail

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Kapila Chandrasena

Airbus bribe case:

Colombo Additional Magistrate Lahiru Silva yesterday (20) granted bail to Mohamed Riswan and Mohamed Irshan, who allegedly received money to stand as sureties for the late former SriLankan Airlines CEO, Kapila Chandrasena. They were identified as residents of Sanchi Arachchi Watta, situated next to the Hulftsdorp court complex.

Chandrasena was found dead at his brother-in-law, Aravinda De Silva’s residence, at No. 38, Pedris Road, Kollupitiya, on 8 May.

The Magistrate also granted bail to B. A. Tissa and Perumal Ganesh, who arranged for Riswan and Irshan to stand as sureties for Chandrasena, who is under investigation for allegedly receiving a USD 2 million bribe through his wife to facilitate an Airbus deal. They, too, residents of Sanchi Arachchi Watta, were granted bail on two personal bail of Rs. 500,000 each.

Airbus had to pay USD 4 billion in penalties after admitting it had paid huge bribes to secure contracts in 20 countries. Sri Lanka is among them.

The Magistrate directed that the Grama Niladhari should certify their residence and the relevant certificates submitted to court and to establish the financial status of those who stood as sureties for the four persons.

The court was told that Mohamed Riswan and Mohamed Irshan obtained 17 Grama Niladhari certificates from January till May 2026. On the basis of a statement recorded from Keselwatta Grama Niladhari S. Nilantha Silva police informed court that the first suspect had obtained 10 certificates and the second person seven.

Fourth suspect Ganesh had first met those who stood as sureties, on 05 May, in the court premises and struck the deal. Crime OIC of Keselwatta Police, Sub Inspector K.W.D. Anuruddha, told court that Mohamed Riswan, Mohamed Irshan and B. A. Tissa hadn’t even known who Chandrasena was and were not related to him in anyway, according to investigations. Police requested that the four persons be further remanded.

The Magistrate granted them bail and set the next hearing for 25 June.

Legal sources said that such illegal practices were rampant, and in this particular case the Court Registrar should have been able to see that the sureties were very much unlikely to be relatives of Chandrasena.

By Shamindra Ferdinando

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Steps underway to safeguard Sri Lanka’s maritime heritage

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The government has initiated a major conservation drive to protect its fragile northern marine ecosystems, with top government officials pledging stronger action against environmental degradation, destructive fishing practices, and Illegal, Unreported and Unregulated (IUU) fishing in the country’s northern seas and adjacent islands.

A high-level discussion chaired jointly by Deputy Minister of Environment Anton Jayakody and Deputy Minister of Defence Aruna Jayasekara was held on Tuesday (19) at the Ministry of Environment to formulate an integrated strategy aimed at safeguarding Sri Lanka’s maritime heritage and accelerating marine conservation initiatives.

Senior naval officers, top environment officials, conservation experts, and representatives from several state agencies attended the meeting, which focused heavily on the declaration of new Marine Protected Areas (MPAs) in the Northern Province.

Among those present were Secretary to the Ministry of Environment K.R. Uduwawala, Chairman of the Marine Environment Protection Authority Samantha Gunasekara, Director General of the Coast Conservation and Coastal Resource Management Department Prof. Turny Pradeep Kumara, Conservator General of Forests Palamakumbura, officials of the Department of Wildlife Conservation, and senior ecologists from International Union for Conservation of Nature.

Officials stressed that the protection of Sri Lanka’s northern marine zone was essential not only for biodiversity conservation but also for sustaining the livelihoods of fishing communities and strengthening the country’s maritime standing internationally.

A major concern raised during the meeting was the increasing ecological destruction caused by IUU fishing activities. Ministers warned that such unlawful practices posed a severe threat to marine biodiversity and the economic stability of local fishermen.

The discussion also focused on intensifying surveillance operations and strengthening law enforcement mechanisms to combat destructive fishing methods, including dynamite fishing, unauthorized spearfishing, and the use of banned fishing gear that continue to devastate coral reef ecosystems and endangered marine species.

Attention was also drawn to governance and infrastructure shortcomings within fishing harbours, with officials identifying the lack of proper management systems and formal regulatory mechanisms as major vulnerabilities contributing to environmental degradation.

As part of the proposed conservation strategy, several islands and surrounding marine zones in the Northern Province have now been identified for official declaration as Marine Protected Areas.

Authorities clarified that the establishment of MPAs would not undermine the livelihoods of local communities but instead promote sustainable fishing practices while opening new opportunities for eco-tourism development.

Officials said these protected marine zones could eventually be developed into internationally recognised eco-tourism destinations, generating fresh economic opportunities for the Northern Province while enhancing Sri Lanka’s environmental credentials globally.

The meeting further highlighted that the declaration of new MPAs would reinforce Sri Lanka’s commitment to international biodiversity conservation obligations and demonstrate the country’s role as a responsible custodian of the Indian Ocean’s marine resources.

A proposal was also made to establish a multi-sectoral working group comprising representatives from the Ministries of Tourism, Fisheries, Defence, Environment, and Justice to implement a coordinated mechanism for the protection of coastal and marine resources under the leadership of the Ministry of Environment.

Officials described the initiative as another significant milestone in Sri Lanka’s broader journey towards building a sustainable biosphere and ensuring long-term environmental security for future generations.

By Ifham Nizam

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CEJ’s landmark legal battles reshape Sri Lanka’s environmental justice landscape

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Dilena with Senior Attorney-at-Law, Dr. Ravindranath Dabare, and CEJ Chairman Hemantha Withanage

In a country where environmental destruction, political interference and weak enforcement have often overshadowed conservation efforts, the Centre for Environmental Justice (CEJ) has emerged as one of Sri Lanka’s most formidable legal defenders of nature.2

From the catastrophic MV X-Press Pearl Disaster to the destruction of the Wilpattu National Park ecosystem, CEJ has consistently used the courts to challenge environmental crimes, state negligence and corporate irresponsibility, securing several landmark judgments that have transformed the country’s environmental jurisprudence.

Speaking to The Island, CEJ Executive Director Dilena Pathragoda said these legal victories were not merely courtroom successes but historic interventions aimed at safeguarding the rights of future generations.

“Environmental litigation is not only about protecting forests, rivers or wildlife. It is fundamentally about protecting people, public health, livelihoods and the constitutional rights of future generations to live in a safe and healthy environment,” Pathragoda said.

Among the most consequential legal actions spearheaded by CEJ was the litigation surrounding the X-Press Pearl maritime disaster, regarded as Sri Lanka’s worst marine environmental catastrophe.

The Island, which was among the first newspapers to consistently highlight the gravity of the X-Press Pearl environmental disaster and its long-term ecological consequences, closely followed the legal battle that eventually resulted in a landmark compensation ruling.

The Singapore-flagged cargo vessel caught fire and sank off Sri Lanka’s western coast in 2021, releasing massive quantities of hazardous chemicals, microplastics and pollutants into the Indian Ocean, devastating marine ecosystems and fishing communities.

Pathragoda noted that the Supreme Court’s direction for compensation amounting to nearly USD 1 billion marked a turning point in Sri Lankan environmental law.

“For the first time, Sri Lanka robustly applied the internationally recognised ‘Polluter Pays Principle’ in a manner that sent a strong signal to multinational corporations and shipping operators that environmental destruction carries enormous legal and financial consequences,” he said.

Environmentalists say the ruling significantly strengthened accountability standards for transboundary pollution and maritime negligence.

Wilpattu judgment becomes watershed moment.

The CEJ-led litigation over the illegal clearing of forests adjoining Wilpattu National Park is widely regarded as one of the most powerful environmental rulings in South Asia.

The controversial clearing of the Marichchukaddi forest reserve for settlement purposes triggered widespread outrage among conservationists and scientists.

According to Pathragoda, the judgment established that politically motivated environmental destruction could not be justified under any circumstances.

“The court recognised that no authority, regardless of political power, has the right to destroy protected forests in violation of environmental laws,” he stressed.

In a landmark directive, the Court of Appeal ordered reforestation of the destroyed lands and held responsible state actors personally accountable for restoration efforts.

Legal analysts described the ruling as a major advancement in public trust doctrine and environmental accountability in Sri Lanka.

CEJ also played a central role in challenging controversial government attempts to legitimise the possession of illegally captured wild elephant calves through relaxed registration regulations.

The organisation argued that the gazette notification undermined wildlife protection laws and effectively rewarded wildlife traffickers.

“Sri Lanka’s elephants are part of our national heritage and ecological identity. Weakening protections for illegally captured elephants would have legitimised wildlife crime,” Pathragoda said.

The resulting court intervention became a significant legal safeguard for wildlife conservation and strengthened enforcement against illegal wildlife trade networks.

The deadly Meethotamulla Garbage Dump Collapse disaster also became a defining moment for environmental litigation in Sri Lanka.

CEJ had long warned authorities about the dangers posed by the uncontrolled garbage mountain in a densely populated residential area.

After the catastrophic collapse that killed dozens of residents, legal proceedings intensified scrutiny on failures in waste management governance.

Pathragoda said the tragedy demonstrated the devastating human cost of environmental negligence.

“Environmental justice is inseparable from social justice. Poor communities are often forced to bear the heaviest burden of pollution, waste and environmental mismanagement,” he observed.

The case helped reinforce the principle that improper waste disposal and environmental negligence can amount to violations of citizens’ fundamental rights.

CEJ also gained international attention through its legal challenge against the illegal importation of hazardous waste containers from the United Kingdom.

Hundreds of containers containing clinical and mixed waste had been brought into Sri Lanka in violation of international environmental conventions and domestic regulations.

The legal action ultimately compelled authorities to ensure the waste was returned to the country of origin.

“Sri Lanka cannot and must never become a dumping ground for toxic waste generated by wealthy nations,” Pathragoda asserted.

Environmental observers said the case strengthened Sri Lanka’s standing under the Basel Convention and reinforced national sovereignty in environmental governance.

Pathragoda believes Sri Lanka’s environmental litigation landscape is evolving rapidly, with courts increasingly willing to intervene where environmental harm threatens public welfare.

However, he warned that environmental destruction continues at an alarming pace due to weak enforcement, political patronage and short-term economic priorities.

“The real challenge is not the absence of laws. Sri Lanka already possesses many strong environmental statutes. The problem lies in implementation, political interference and the lack of accountability,” he said.

He added that CEJ would continue pursuing strategic litigation to protect forests, biodiversity, marine ecosystems and vulnerable communities.

“Every environmental case we file is ultimately about ensuring that future generations inherit a country that is still ecologically alive,” Pathragoda said.

He noted as climate risks intensify and ecological pressures mount, CEJ’s courtroom battles are increasingly being viewed not merely as legal contests, but as critical struggles over the environmental future of Sri Lanka itself.

 

By Ifham Nizam

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