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Lanka should aim for revenues of 12-pct of GDP, avoid shortfalls: IMF

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Peter Breuer

Sri Lanka should aim to get state revenues more than 12 percent of gross domestic product and avoid revenue shortfalls next year, International Monetary Fund Senior Mission Chief Peter Breuer said.

Sri Lanka projected revenues (including non-tax) of 3,408 billion rupee (11.3 -pct of GDP) and the IMF 3,286 billion rupees (about 10.9-pct).Up to July revenues were up 39 percent and tax revenues were up 43 percent, but IMF expects year end revenues to be 15 percent below target.

“Clearly the objective is not to let it happen next year and make up for that shortfall,” Breuer told reporters after Sri Lanka and the IMF reached a staff level agreement incorporating the next set of targets and reforms.

“So, one of the objectives is to get revenue that exceeds 12 percent of GDP and accordingly measures will have to be implemented to achieve that objective.”

Sri Lanka has met all quantitative targets, except for the June indicative revenue target, and most structural benchmarks required up to June have been completed, Breuer said. The new staff level agreement will set the targets and reforms for the next phase of the program.

In 2020 in the worst deployment of macro-economic policy by the country’s official economists and their advisors from the private sector, taxes were also cut on top of rates, eventually driving the country to external default. Revnues collapsed from 11.9 percent in 2019 to about 8.5 percent of GDP by 2021.

As forex shortages build up, Sri Lanka’s economic bureaucrats also ban vehicle and non-essential imports, hitting revenues and further worsening the fiscal picture, in an cascading policy error that repeats often, an economic observer said.

Car imports are still banned

Sri Lanka has now slammed high rates of progressive income tax which are hitting employed workers in the corporate sector, triggering a brain drain, particularly of professionals with young children who cannot make ends meet and keep paying housing loans. There are no exemptions for dependents.

A steep currency collapse has also hit alcohol consumption, with industry officials indicating a 40 percent drop from pre-crisis levels, though some firms are said to be avoiding paying collected taxes amid corrupt practices.

The IMF has recommended a series of reforms in a governance diagnostic report including for revenue authorities. Sri Lanka will have to implement “compensating measures” and improve tax administration to get more revenues, the IMF team said.

In the first stabilization year after rate cuts trigger a currency crisis, revenues are difficult to raise due to the slowdown. This year the economy is contracting and revenues are driven partly by inflation, analysts note.



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Supreme Court Justice Murdu Fernando takes oath as Sri Lanka’s 48th Chief Justice

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Supreme Court Justice Murdu Nirupa Bidushinie Fernando was officially sworn in as the Chief Justice of Sri Lanka before President Anura Kumara Dissanayake today (02) at the Presidential Secretariat.

She assumes office as the 48th Chief Justice of Sri Lanka, succeeding Chief Justice Jayantha Jayasuriya, who recently retired. Her appointment received approval from the Constitutional Council.

She began her career at the Attorney General’s Department in 1985, rising through its ranks to become Deputy Solicitor General in 1997 and Additional Solicitor General in 2014. With over three decades of service as a State Counsel, she was appointed to the Supreme Court in March 2018.

As the most Senior Supreme Court Justice prior to her appointment, she has played a significant role in shaping Sri Lanka’s legal landscape. She also served as Senior Additional Solicitor General at the Attorney General’s Department, demonstrating a distinguished career in public service.

Murdu Fernando earned her Bachelor of Laws degree from the Faculty of Law, University of Colombo.

The event was attended by Secretary to the President, Dr. Nandika Sanath Kumanayake.

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SJB questions NPP over MPs’ perks and privileges

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…flays govt. for diverting members’ salaries to a special account

by Shamindra Ferdinando

Having repeatedly accused previous governments of showering perks and privileges on lawmakers, the newly elected NPP government is continuing with the practice, says SJB MP Ajith P. Perera.

Kalutara District SJB leader Perera has challenged the NPP to reveal any perk or privilege that their parliamentary group had decided to forgo in keeping with the pledges they made during the presidential and parliamentary elections. Perera said so in response to The Island queries regarding the ongoing exchange between the NPP and the main Opposition SJB over perks and privileges enjoyed by members.

Referring to a statement Secretary General of Parliament Kushani Rohanadeera made during a recent press briefing held in parliament, Perera pointed out that the NPP leaders had harped on waste of state funds on maintaining lawmakers. But the Secretary General categorically had declared that none of the MPs’ perks and privileges had been done away with, Perera said.

A vast majority of those who voted for the NPP at presidential and parliamentary elections had expected the NPP MPs to serve on a voluntary basis and refuse heavily subsidised meals provided in parliament, etc., the Kalutara District MP said.

The NPP won 159 seats, including 18 National List slots whereas the SJB managed to secure only 40; it had 54 seats in the previous Parliament.

Recalling that the JVP used to claim that salaries of its MPs had been directed to one account and allocations made thereafter depending on members’ requirements, Perera asked whether the ruling party with 2/3 majority in parliament could do the same.

Ajith

Responding to another query, Perera said that the practice adopted by the NPP meant that public funds were to be transferred to an account maintained by a political party. The party would be receiving quite a large amount of money as the monthly take home salary of an MP was approximately Rs 300,000 though the basic salary remained Rs. 54,285.

MP Perera said that NPP’s promise to do away with what it called a privileged class of politicians had boomeranged on the ruling party. “People have already realised that the NPP never meant to implement what it promised,” MP Perera said.

Those who questioned the maintenance of the MPs’ housing scheme at Madiwela should know that the NPP MPs would use them, MP Perera said.

The NPP had the public believe that their MPs would not occupy the Madiwela houses, Perera said.

Out the 108 Madiwela housing units, 80 have been allocated to NPP MPs and 28 to Opposition members. MP Perera said that he was not aware of the exact allocation but knew that houses had been allocated to the NPP MPs.

MPs living 40 km away from parliament are entitled to the Madiwela houses. Although the Madiwela complex consists of 115 units, 0nly 108 are available for the MPs as seven of them have been allocated to the police, fire brigade and other services providers.

Perera said that the forthcoming Local Government election would provide an opportunity to the electorate to express their dissatisfaction at the NPP’s broken promises. He said that the reduction of Octane 92 petrol by Rs 2 a litre in the recent price revision had exposed the duplicity of the ruling party again. The NPP had also failed to grant electricity consumers the promised relief, he said.

Our efforts to contact JVP General Secretary Tilvin Silva, NPP General Secretary Dr. Nihal Abeysinghe, MP, and Cabinet spokesman and media minister Dr. Nalinda Jayatissa for comment failed as they did not answer their phones.

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AKD gladdens Ranil’s heart

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Ranil Wickremesinghe

By Chatura Pamunuwa

Former President Ranil Wickremesinghe commended President Anura Kumara Dissanayake, on Saturday, for continuing with the IMF programme, initiated under the former’s watch as the President. He said it was a critical step for Sri Lanka’s economic recovery.

Wickremesinghe said so at the inauguration of the Amari Colombo Hotel, the first-ever five-star international hotel owned by a Lankan entrepreneur in Colombo.The hotel, part of the Amari Hotel chain, is owned by W. Winil, head of the Winil Group of Companies. The event marked a milestone in the local hospitality industry, with the establishment of a world-class facility under Sri Lankan ownership.

Speaking at the event, Wickremesinghe stressed the importance of utilising the country’s existing capacity as a foundation for economic revival.

” I express my appreciation for President Anura Dissanayake and the government for adhering to the framework agreed upon with the IMF. We cannot deviate from it. Once we maximize our existing capacity, we can then explore new paths for development,” he said.

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