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PB critical of import restrictions



By Shyam Nuwan Ganewate

President’s Secretary P. B. Jayasundera yesterday said that imports should be relaxed instead of imposing restrictions, in a manner that it would not be harmful to the government policy framework.

Dr. Jayasundera, the Secretary to the Treasury at the height of the war and former top Central Banker, was responding to a query about the CBSL proposal to restrict non-essential imports.

He said he was against the policies adopted by the Central Bank.

Explaining his views on restriction of imports, Dr. Jayasundera said, the importation of certain commodities had to be restricted and one was fuel for which a price mechanism had to be adopted.

“If the government does not ration fuel to the consumer, the country will have to soon change to renewable energy,” the President’s Secretary said.

Dr. Jayasundera asked why a country which spent USD 5,000 mn annually on oil imports could not commission a number of projects to generate renewable energy.

Jayasundera said that hence a certain component of imports such as raw material would be used to re-export as finished products, the imports shouldn’t be restricted and if we are to develop our economy based on information technology, then all imports required to achieve the objective should be allowed.

“The Central Bank has to take the necessary steps for the proper management of foreign exchange reserves and win the confidence of the foreign capital market, manufacturers and specially exporters,” the one time Treasury Secretary said.

He said in the current year, it was expected to increase the exports relating to information technology to reach USD 1.7 billion and increase it further in the future.

The officials of the Central Bank and members of its Monetary Board should change the country to an export oriented economy.

Jayasundera, whose expertise had been used even by previous UNP and SLFP regimes and even by former Treasury Secretaries R. Paskaralingam  and A.S. Jayawardena during Presidents  Premadasa and Kumaratunga, said that he proposed to the central Bank to introduce a Green Financial facility of Rs. 50 billion and “we must encourage the local banks to adopt such measures”, he said.

“The Central Bank should act as a catalyst in this connection instead of attending to the day to day functions of the bank”, he said.

Dr. Jayasundera said he had sent a set of proposals to the Central Bank in that connection and believed that there would be a positive response from it.



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“The market witnessed price reductions and promotional trade schemes to stimulate consumption,” Hemas Holding told shareholders in the March quarterly statement.

“However, changes made to the personal income tax structure severely impacted modern trade sales volumes as consumers rationalised their purchases under reduced disposable income levels.”

Sri Lanka hiked personal income tax rates in 2023. Value added taxes were raised to 15 percent from 8 percent last year. Another 2.5 percent cascading tax was imposed on top of VAT, the effect of which was estimated to be around 4.5 or more through the cascading effect.

While value added tax allows the government to get tax revenues after citizens make transactions and getting the economy to work, based on best decisions needed to drive the economy to satisfy real needs, income tax kills economic decisions and transfers money to state actors, analysts say.

Net gains on income tax therefore comes at a cost of lost value added tax as well as killed real economic activities which would otherwise have been based on decisions of those who earned the money.

UK also almost doubled VAT in 1979, also to 15 percent, cut the base income tax rate and widened thresholds above inflation to give choice to individuals, amid criticism from Keynesian style or mainstream economists to recover the economy, after two back-to-back IMF programs failed to deliver concrete results, analysts point out.At Hemas Holdings, group revenues went up 52.6 percent to 32 billion rupees in the March 2023 quarter from year earlier amid price inflation as the rupee fell, and cost of sales went up 45.1 percent to 22.2 billion rupees, allowing the group to boost gross profits 72 percent to 9.8 billion rupees, interim accounts showed.

However, administration costs went up 54 percent, selling and distribution costs went up 36 percent, and finance costs went up to 1.3 billion rupees. Profit after tax was flat at 1.06 billion rupees.Sri Lanka’s central bank stabilized the rupee in the second half of 2022 after the rupee collapsed from 200 to 360 to from two years of money printing and also removed a surrender rule in March allowing the exchange rate appreciate.

The US Fed also tightened policy from March 2022 helping bring down global commodity prices after triggering inflation not seen for 40 years through Coronavirus linked money printing or accommodating a real shock through monetary expansion.

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“The decline in global commodity prices in the second half of the year, enabled the business to make price reductions across the portfolio.

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Mainstream economists mis-target rates to boost growth known as either monetary stimulus or bridging an output gap, though the effort result in instability and economic contractions.

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