By Shamindra Ferdinando
State Minister of Money and Capital Market and State Enterprise Reforms Ajith Nivard Cabraal says that in spite pressure mounting on the govenrment to extend the current lockdown further, it should tread cautiously.
State Minister Cabraal, who served as the Governor of the Central Bank, from 2006 to 2015, said that lockdowns caused irreparable damage at a time the national economy was under severe pressure due to Covid-19. The lockdowns could be quite devastating and inflict unbearable losses on the economy, he noted.
Cabraal pointed out that those who relentlessly pushed for lockdowns didn’t take into consideration other vital factors. He said the people should strictly follow health guidelines and get vaccinated, as quickly as possible.
In addition to State Minister Cabraal, Aviation Minister and SLPP strongman in Gampaha, Prasanna Ranatunga, also opposed the lockdown.
Noting that a section of the government, too, had called for the lockdown, State Minister Cabraal urged all stakeholders to examine the situation in its entirety without focusing on selected factors.
The Island: State Minister, you emphasised several times how lockdown undermined the national economy. You also pointed out difficulties caused by it. However, the government not only declared a lockdown on August 20 for ten days, but extended it till Sept 6. Did you ask/advise the administration against it?
State Minister: Medical authorities have been constantly requesting the lockdown of the country in order to deal with the pandemic. Unfortunately, the counter argument setting out the economic damage that is caused as a result of such closure has not been presented adequately. That is why it’s important that the facts, figures and impact of a lockdown are known and understood, so that more informed decisions can be made in the future.
The Island: In 2018 and 2019 govt collected over Rs 1,900 as revenue. But, that figure dropped to little over Rs 1,300 bn in 2020. Can you blame that on Covid because the Opposition says the government lost over Rs 500 bn by doing away with a spate of taxes on addition to the reduction of duty on sugar to 25 cents from Rs 50 per kilo?
State Minister: In 2019, the government had estimated to collect about Rs. 2.2 trillion as revenue. However, due to the sharp contraction of the economy following the massive Easter Sunday carnage that sent shock waves across the world and debilitated the country’s vibrant tourism industry, the actual revenue dropped drastically to about Rs. 1.9 trillion only: a decrease of about Rs. 0.3 trillion! Hence, it was clear that the abnormally high rates of income taxes, VAT and other duties were counterproductive and were not yielding the estimated results. That is why the new government reduced the tax rates so that the business sector could be given a boost to grow fast and the economy could revive and recover. In fact, ifhad the government not reduced taxes at that time, the entire business sector would have collapsed because by that time, businesses were stagnant due to the high interest rates and high taxes. Unfortunately, however, the progressive policy measure of lowering all taxes including customs duties, did not lead to the intended consequence of the expected stimulation of the economy mainly due to the pandemic effect and lockdown. However, it must be said that the economic fallout from the pandemic would have been a lot worse and people driven to severe poverty and despair had the taxes not been reduced by end 2019. In fact, in such a scenario, the entire country may have even come to a grinding halt, with the industries and services sectors collapsing.
Self-Employed Traders petition SC over govt. favouring liquor dealers
By A.J.A Abeynayake
The Supreme Court has decided take up, on 04 Oct. for hearing a petition filed by the Association of Self-Employed Traders against the opening of liquor stores during the current lockdown.
The traders have requested the apex court to order the government to allow members of their union to engage in business activities since the liquor stores had been allowed to reopen during the lockdown.
The petition was taken up before a three-judge bench comprising justices L. T. B. Dehideniya, Shiran Gooneratne and Janak de Silva, yesterday.
The State Counsel appearing for the respondents said he had received the relevant documents pertaining to the case only last Friday evening. Therefore, the State Counsel requested the court to give him time to seek advice from the respondents who were many.
Attorney-at-Law Eraj de Silva, appearing for the petitioner at the time, said about 7,000 members of his client union had lost their livelihoods due to the decision by the respondents.
Therefore, Attorney-at-Law Eraj de Silva requested the court to give an early date for considering the petition.
Accordingly, the Supreme Court decided to take up the petition for consideration on 04 Oct and directed the lawyers of the petitioners to take steps to send notice to the respondents before that date.
The petition was filed by the President of the United National Self-Employed Trade Association G.I. Charles, its Vice President P.G.B. Nissanka, and Secretary Krishan Marambage.
The petition names 47 respondents, including the Director General of Health Services, the Inspector General of Police and the Director General of Excise.
The petitioners allege that under the quarantine law, the Director General of Health Services, who is the competent authority, issued a notice on Aug 20 prohibiting the opening of liquor stores.
The petitioners point out that steps were taken to open liquor stores countrywide contrary to the regulations of the Health Authority.
The Director General of Health Services, the Commissioner General of Excise and the Inspector General of Police have stated that they have not allowed the reopening of liquor stores.
The petitioners have also requested the Supreme Court to issue an order to the respondents to allow the members of their association to engage in business activities as the liquor stores are allowed to remain open.
Lankan born newly elected Norwegian MP Gunaratnam calls for investments here
Newly elected Norwegian Labour Party MP, Lankan born Kamzy Gunaratnam says she will ask the new Norwegian government to continue engagement with the country of her birth.
Speaking at a virtual media conference on Sunday night, Gunaratnam said that she does not believe that boycotting Sri Lanka is the way forward.
“I don’t believe in boycott. There needs to be investments. Only that will ensure employment,” she said.
Gunaratnam said that she is also prepared to meet President Gotabaya Rajapaksa, if invited, for talks.
She said that Norway must continue to assist Sri Lanka through trade, education and in other ways.
Gunaratnam said that she will also discuss with her party and the new Norwegian Foreign Minister, as well as the Norwegian Ambassador in Sri Lanka and see how best Norway can assist the country.
Gunaratnam said that Sri Lankans must also decide the best solution for Sri Lanka and not any foreign country. She said that Sri Lanka must not wait for foreign pressure to work on a solution.
The newly elected Norwegian MP also said that minority rights in Sri Lanka must be protected.
As a Norwegian MP she said that her main focus in the Norwegian Parliament will be to push for equality in Norway.
Going to IMF best solution, says Ranil
UNP leader Ranil Wickremesinghe insists that a programme with the International Monetary Fund (IMF) is necessary to mitigate impact of the growing debt repayment crisis; homegrown solutions are not effective.
“Unlike in the past, Sri Lanka’s debt problem has increased at a time when there is a global debt problem. This makes the situation more challenging and complex. Sri Lanka is a highly import-dependent economy,” Wickremesinghe said during a panel discussion, organised by the International Chamber of Commerce Sri Lanka on Saturday.
The UNP leader said that the government shouldn’t sell state assets to ease off the shortage of foreign exchange to have breakfast but reinvest those proceeds back in the economy. “Going to the IMF is the best solution,” Wickremesinghe said.
With reference to homegrown solutions, he referred to the mess caused by the government in promoting Dhammika peniya as one of the failed measures earlier on to curb the spread of the COVID-19 pandemic.
The former Prime Minister said that Sri Lanka should use the current situation to forge ahead with structural and public sector reforms which were postponed due to political considerations in the past.
The former PM suggested that the re-opening of the country be delayed till mid-October.
In responding to the issue of debt management in Sri Lanka, the UNP leader said that the most pressing concern is addressing the dwindling foreign exchange reserves of the country.
He explained that the regional foreign exchange reserves were projected to increase over the course of the year, however, Sri Lanka’s foreign exchange reserves were on a downward trend.
He also said that economic recovery based on a resurgence of the tourism industry would be uncertain, and until airline ticket prices were reduced it was unlikely that tourist arrivals would increase significantly.
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