News
President ready to exempt school supplies, health equipment, medicine, etc., from VAT
By Saman Indrajith
President Ranil Wickremesinghe yesterday told Parliament that the government was planning to exempt items such as books, school equipment, health equipment, and medicine from VAT.
Making a special statement in the House, the President said: “By 2022, the country was slated to repay approximately US$6 billion in foreign debt annually, amounting to about 9.5% of the GDP, a considerable strain for any nation. Through successful negotiations for debt restructuring, we aim to alleviate this burden by reducing the annual foreign debt payments to 4.5% of the GDP, a substantial halving of the previous percentage.
“If the current trend of economic growth, as observed in 2022 and 2023, persists, we can anticipate maintaining a high percentage of state income. In such a scenario, servicing the debt would no longer pose a burden on the country. Currently, we have managed to elevate state revenue to nearly 11% of the Gross Domestic Product (GDP). This increase necessitated the imposition of Value Added Tax.
“Undoubtedly, this decision was a bitter and challenging one. We made the decision to implement such a tax with great reluctance. However, considering the economic ailment we face, there are no other viable options. We must endure this temporary pain for the greater good. The implementation of VAT has bolstered the government’s revenue, demonstrating to the international community our capacity to repay the debt. With the increase in government revenues and the revival of the economy, the rupee has strengthened. The strengthening of the rupee has led to a decrease in the prices of imported goods, including fuel. As a result, all VAT-paying companies are now reaping the benefits of the stronger rupee, which extends to the entire country. Furthermore, we anticipate additional benefits in the future.”
“The impact of this economic progress is evident throughout society today. How many individuals embark on pilgrimages to Anuradhapura and Sripada from hand tractors to large buses? How many undertake journeys to Talawila and Madu Church for religious purposes? How many indulge in leisurely trips to Nuwara Eliya? How many individuals park their cars on the side of the road, open their trunks, and initiate small businesses due to their inability to repay the loans they obtained? And are they now experiencing a sense of freedom? How challenging is it to secure a seat on a long-distance coach? How many travellers fill the unreserved compartments? How many tourists explore every corner of the country?
“A nation that once struggled to leave their homes is now traversing freely. Previously, they couldn’t afford to put a drop of oil in their car to rush a sick person to the hospital or accompany a deceased loved one to the cemetery. People faced challenges such as not having gas for cooking at home, leading many to prepare meals outdoors. A nation that, when a child fell ill, would go from house to house in the middle of the night searching for a Paracetamol pill,” he said.
Prime Minister Dr. Harini Amarasuriya participated in a high-level dialogue titled “Tourism as Soft Power and Diplomatic Capital” held at the Euronews Hub, Piz Buin Davos, on the sidelines of the World Economic Forum on January 20.
The session explored how tourism functions as a strategic instrument of diplomacy by strengthening international trust, cultural exchange, and regional cooperation through mobility and people-to-people engagement. The Prime Minister shared the panel with Mr. Kuban Omiraliyev, Secretary General of the Organization of Turkic States and Mr. Meshari Alnahar – CEO Aseer Investment Company, Saudi Arabia.
Addressing global trends, the Prime Minister emphasized that Sri Lanka is an example of hope, recovery and resilience in a world of conflict demonstrating how tourism can play a critical role in a changing global environment particularly amid climate shocks, geopolitical instability, and uneven economic recovery. She noted that tourism is not only an economic sector but also a vital diplomatic bridge that supports livelihoods, builds relationships and connects people.
Drawing on Sri Lanka’s recent experience, she highlighted the country’s strong tourism recovery despite multiple crises, including the impact of Cyclone Ditwah. Transparent crisis management and strategic engagement with international partners helped sustain visitor confidence, resulting in record tourist arrivals even in challenging circumstances.
The Prime Minister also underscored the importance of green and climate friendly tourism infrastructure and underlined that Sri Lanka welcomes long term investment in tourism. She pointed out that tourism supports millions of jobs worldwide and that inclusive policies are essential to ensure fair opportunities, particularly for women and vulnerable communities.
[Prime Minister’s Media Division]
During an operation conducted in the dark hours of 20 Jan 26, the Sri Lanka Navy seized two (02) Indian fishing boats and apprehended seven (07) Indian fishermen while they were poaching in Sri Lankan waters, off Kovilan, Jaffna.
The seized boats and Indian fishermen was to be handed over to the Fisheries Inspector of Myliddy, Jaffna for onward legal proceedings.
Prime Minister Dr. Harini Amarasuriya participated in a series of high-level bilateral meetings on January 20 on the sidelines of the 56th Annual Meeting of the World Economic Forum in Davos-Klosters, Switzerland.
The Prime Minister attended a productive bilateral meeting with Mr. Jozef Síkela, European Commissioner for International Partnerships. During the discussion, both sides focused on strengthening Sri Lanka–EU cooperation and advancing mutual interests.
Prime Minister Amarasuriya also met with Mr. Masato Kanda, President and Chairperson of the Board of Directors of the Asian Development Bank (ADB), at the WEF Congress Centre. The meeting provided an opportunity to discuss ongoing engagement and future collaboration between Sri Lanka and the ADB.
In addition, the Prime Minister held discussions with Mr. Hassan El Houry, Chairman of Menzies Aviation, where opportunities for collaboration in aviation services and connectivity were explored.
The Prime Minister also participated in a high-level dialogue at the Global Tourism Forum held at the Euronews Hub, Piz Buin, Davos, as part of the World Economic Forum engagements.
Dr. Anil Jayantha, Minister of Labour, and the Deputy Minister of Finance were also present at these meetings.
[Prime Minister’s Media Division]
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