By Shyam Nuwan Ganewatta

The government has successfully laid the groundwork for economic stabilisation, Labour Minister and Deputy Minister of Economic Development, Professor Anil Jayantha Fernando, announced on Thursday (26) during a press conference.

Speaking at the Presidential Media Centre, Professor Fernando stated that the economy is steadily stabilising, as evidenced by official indicators and growing public confidence.

He further highlighted that the government has allocated the necessary funds for the next four months through a vote on accounts. He added that the government decided to uphold the agreement signed by the previous administration with the country’s International Sovereign Bond (ISB) holders to avoid prolonging the negotiation process.

Addressing concerns regarding the withholding tax, Professor Fernando remarked, “It is incorrect to say the government has imposed excessive taxes through the withholding tax. The government is not introducing additional income taxes. Instead, we aim to broaden the tax base and enhance efficiency in tax collection. The most effective approach is to tax at the source. Tax collection must follow fair mechanisms, and we have increased the withholding tax to ensure those with substantial deposits contribute appropriately.”

During the same briefing, Deputy Minister of Finance and Treasury, Harshana Suriyaaratchi, stressed that there would be no further extensions to the suspension of the Parate Execution Law beyond 21 March 2025.

According to data from the Central Bank, 99% of borrowers with loans below Rs 25 million have agreed to renegotiate their loans with banks, with a 12-month grace period to be implemented. Relief measures have also been introduced for businesses with loans below Rs 25 million. Additionally, borrowers with loans between Rs 25 million and Rs 50 million have been granted a nine-month extension, while other borrowers have been provided with a six-month grace period.

The government has been engaging with stakeholders to develop long-term solutions to these challenges, rather than relying solely on extending the suspension of the Parate Execution Law.