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Prez insists on IMF approved new tax regime, warns of dire consequences unless fully implemented
President Ranil Wickremesinghe, in a televised statement yesterday (18), warned that Sri Lanka wouldn’t be able to obtain assistance of the IMF, or any other lending agencies, or countries, if tough new tax regime was not implemented.
The President said: “If we withdraw from this programme, we will not receive assistance from the IMF. If we don’t get the IMF certification, we will not get the support of those international institutions, such as the World Bank, and Asian Development Bank, and the countries that provide support. If that happens, we will have to go back to the era of queues.
“We may have to face even tougher times ahead. We have to obtain these loans and go for the debt-restructuring programme. We are not doing these wilfully. We have to take certain decisions, even reluctantly.
“However, we will reconsider these decisions periodically.”
The following is the full text of the President’s statement: “An important step in Sri Lanka’s debt restructuring program took place last week. A team under our Minister of State for Finance participated in the annual (October 07) meeting of the International Monetary Fund. Accordingly, a meeting was held under the leadership of the International Monetary Fund, with the countries that had given loans to Sri Lanka and some private institutions that had also given loans.
Over 75 persons participated directly or through zoom technology. The primary purpose of this was to come to a common platform with the 03 main countries that have granted loans to Sri Lanka, namely Japan, China and India, and discuss the next steps to be taken to provide these concessions.
During this meeting, the International Monetary Fund and Sri Lanka pointed out the need for a common platform. India and China have informed us that they will investigate further and provide answers. These two countries have also informed us that bilateral discussions may be required.
Many other countries also participated in this meeting. It is notable that, an Assistant Secretary of the United States Treasury came here. All this was possible because we are implementing the decisions taken in consultation with the International Monetary Fund.
There is one thing about the income of the Government of Sri Lanka. In 2015, when the representatives of the International Monetary Fund came to Sri Lanka, we were told of the need for a surplus in the primary budget. Therefore, we provided that surplus in 2017-2018. But it was reduced as a result of the 2019 Easter Sunday bombings. However, there were no serious issues. They were optimistic that we would be able to increase our revenue, to have a surplus in the primary budget.
At the time, our income was between 14.5% and 15% of the Gross Domestic Product (GDP). However, we agreed that we can gradually increase this to 17%-18%.
However, in November 2019, the country’s taxes were drastically reduced. Then the government revenue decreased to 8.5%. There, the International Monetary Fund declared that it is unable to provide aid because of these agreements.
That year we lost around Rs. 600-700 billion. Simultaneously, we had to face the Covid pandemic. These issues are the main factors that led to the collapse of Sri Lanka’s economy.
The International Monetary Fund notified us that we need to show a surplus in our primary budget. We agreed to it because we needed their support.
The other factor is that it was decided to increase the country’s income from 8.5% to 14.5% of the GDP. It’s impossible to do it all at once. We have planned to increase the country’s income to 14.5% of the GDP by 2026.
Initially, we had to think about how we were going to increase our income. We have printed money because our income decreased. During the past two years, Rs. 2300 billion has been printed. As a result, inflation has risen to 70% – 75%. Food inflation has increased even more.
These need to be controlled, but we also need to secure our income. Therefore, a new tax system was proposed during these discussions. The International Monetary Fund had notified that even the export industries are required to pay taxes.
It was indicated especially in countries with an export economy, taxes are being paid. The IMF also pointed out that our primary export economy was the plantation industry. During British rule, taxes were charged from every plantation sector, including tea, coconut and rubber. Therefore, we decided that if we are to move towards that goal, we will have to pay taxes. The export sector has now questioned this move and if these facts are to be submitted to the International Monetary Fund, we have discussed carrying out an analysis.
The second matter is individual taxes. We have obtained the majority of taxes through indirect taxing. Even the majority of the country’s people below the poverty line had no choice but to pay taxes indirectly. Our direct tax revenue is 20%. 80% which was derived from indirect taxes. The International Monetary Fund had specific questions about it and they were of the view that the amount of tax obtained from direct taxes should exceed 20%. Otherwise, they noted that this would not be successful, as ordinary citizens would be forced to pay taxes.
Therefore, according to this mechanism, and to achieve the goals of 2026, the treasury and the International Monetary Fund discussed the possibility of limiting the taxation from those who have an income of 02 lakhs, but that was not possible. Eventually, income tax was levied on people earning over 100,000. Today, this has become a huge problem in the country.
I would like to point out that based on this backdrop, we may not be able to achieve the desired goals without this tax system. The desired goal is to achieve 14.5% – 15% gross domestic product (GDP) revenue by 2026.
If we withdraw from this program, we will not receive assistance from the IMF. If we don’t get the IMF certification, we will not get the support of those international institutions such as the World Bank, and Asian Development Bank, and the countries that provide support. If that happens, we will have to go back to the era of queues.
We may have to face even tougher times ahead. We have to obtain these loans and go for the debt-restructuring program. We are not doing these wilfully. We have to take certain decisions even reluctantly. However, we will reconsider these decisions periodically.
While successfully conducting our debt restructuring program, we expect to move forward through the economic success achieved through a bountiful Maha season. This will help reduce our economic pressure. We have also discussed measures to increase our foreign reserves. Once we have implemented these measures, we can move forward.
We are in a difficult period. We will have to make tough decisions during these difficult times. I took on this difficult task when no one else was willing to come forward. Hence, I feel I must enlighten everyone regarding this background. The government is ready to discuss this further.
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Construction of Accident and Emergency unit at Mannar District General Hospital begins under President’s patronage
Construction work on the Accident and Emergency Unit at the Mannar District General Hospital commenced this morning (16) under the patronage of President Anura Kumara Dissanayake.
The Accident and Emergency Unit, which is being constructed at a cost of Rs. 600 million with a grant from the Government of India, will be equipped with all modern facilities and will further expand healthcare services for the people of Mannar. Construction is scheduled to be completed in the first quarter of 2028.
Upon completion of the project, the people of Mannar will be able to receive emergency trauma care and other specialised healthcare services without having to travel to Colombo or other major cities. At the same time, the Government has taken steps to provide the Mannar District General Hospital with the medical equipment and staff required to support these services.
President Anura Kumara Dissanayake, who attended the commencement of construction work on the Accident and Emergency Unit, also engaged in a cordial conversation with members of the hospital staff.
Addressing the ceremony held thereafter, Minister of Health and Mass Media Dr. Nalinda Jayatissa said that as the Mannar area, which is expected to make an important contribution to the national economy, develops, this project will help ensure quality healthcare services for its people. The Minister further emphasised that, in creating a “A Thriving Nation – A Beautiful Life”, the Government is committed to ensuring healthy and disease-free lives for all 21.7 million citizens of the country.
Further remarks by Minister of Health and Mass Media Dr. Nalinda Jayatissa
“The Mannar District is an area that is expected to make an important contribution to our national economy. A large number of local and foreign tourists will visit this area both now and in the future.
With the development of transport facilities, Mannar will experience further economic growth. In such a context, upgrading the services of the Mannar hospital will be important in ensuring quality healthcare services for the people of this area as well as those who visit the region.
Accordingly, construction of this Accident and Emergency Unit will be completed and the facility will be made available to the public in the first quarter of 2028. In addition, staff quarters for doctors at the Mannar District General Hospital are being constructed in a four-storey building at a cost of Rs. 243 million. These construction activities are also expected to be completed within one and a half years. Construction of the new Paediatric Unit, being built at a cost of Rs. 230 million, is also expected to commence within this year.
Similarly, the CT scanner that you have been continuously requesting will be provided to you by around February next year. It is worth approximately Rs. 250 million. While these building facilities are being developed, we will also provide the staff required by the hospital. You have also received intern medical officers for the first time in the history of this hospital. Several more intern medical officers will be assigned to you this October. At the same time, steps are currently being taken to address the shortage of specialist medical officers.
On 31 October, we will recruit 2,600 new nurses, and a portion of them will be assigned to this hospital. Personnel required for the allied health professions are also currently undergoing training. Once their training is completed, the services of several of them will be made available to this hospital. In addition, we will recruit 1,100 Public Health Midwives, a portion of whom will also be assigned to this area.
This Government is taking numerous measures to provide people with healthy lives. Through these initiatives, we hope to improve the health and quality of life of the people in this area.
More than Rs. 600 billion has been allocated to the Ministry of Health over the past two years, and the President continuously monitors all its projects. Going beyond that, I am deeply grateful to the President for joining us today.
We have received the support of the Government of India for this project. I extend my special appreciation to the Government of India, including the Prime Minister, and its people, as well as to the High Commissioner of India and his staff, who have been committed to coordinating these activities and ensuring the success of this project.
Among district hospitals, the Mannar hospital is one with very limited facilities. Despite these shortcomings, I appreciate the dedication of all members of the staff, including the doctors, who remain committed to providing the best possible service to the people. I also consider the President’s visit to be a recognition of your service.
Two years ago, on 21 September 2024, the people of this country gave a clear mandate to create a “A Thriving Nation – A Beautiful Life”. That mandate was further strengthened in November 2024. Under the mandate to create a “A Thriving Nation – A Beautiful Life”, we have been entrusted with the responsibility of ensuring healthy and disease-free lives for all citizens of this country.
Your area of residence, profession, wealth or ethnicity is of no relevance to us in this regard. The Government’s objective is to create a beautiful life through healthy and disease-free living for all 21.7 million citizens of Sri Lanka.”
High Commissioner of India Santosh Jha:
“The agreements for the emergency unit in Mannar and the medical ward complex in Mullaitivu were signed under President Dissanayake’s leadership. I am happy to see these commitments transitioning smoothly into swift implementation.
His Excellency the Prime Minister of India, Shri Narendra Modi, has said that the development assistance extended by India to Sri Lanka comes with a deep sense of responsibility, a duty that one naturally feels for one’s family member.
We remain firmly committed to working closely with the Government of Sri Lanka and the people of Sri Lanka for the well-being and prosperity of all communities across the island. As neighboring countries and close partners, we will continue to walk together this shared path toward lasting progress and development of our peoples.”
Secretary to the Ministry of Health and Mass Media Dr. Anil Jasinghe
“For several decades, injuries and accidents have been the leading cause of hospital admissions in Sri Lanka. As Mannar is geographically somewhat isolated, it is extremely important for the district to have access to quality, free healthcare services without delay.
The assignment of intern medical officers to this hospital commenced this year. Arrangements are also currently underway to purchase a CT scanner for the Mannar District General Hospital. The hospital is expected to receive improved radiology facilities by the end of this year or the beginning of next year.
I must say that, during my 36 years in public service, last year was the only period during which I did not face any financial difficulties in carrying out my duties. The prudent macroeconomic management of the current Government, including President Anura Kumara Dissanayake, has created the fiscal space required to develop the country’s health services.”
Mannar District Bishop Rt. Rev. Gnanapragasam Anthonipillai, Northern Province Governor Nagalingam Vethanayahan, Members of Parliament representing the Mannar District, Secretary to the Ministry of Defence, Air Vice Marshal Sampath Thuyacontha (Retd), Chiefs of the Defence Services, officials of the Ministry of Health, officials of the High Commission of India in Sri Lanka, Consul General of India in Jaffna Sai Murali S. and officials of the Indian Consulate in Jaffna, among others, attended the occasion.
[President’s Media Division]
News
Special Cabinet Subcommittee and Officials’ Committee appointed to address El Niño Climate Impact meet
The Special Cabinet Subcommittee and Officials’ Committee appointed to take necessary measures to address the impact of the El Niño climate phenomenon met for the fifth time at the Presidential Secretariat on Monday (14) afternoon , under the chairmanship of Minister of Environment Dr Dhammika Patabendi.
As the El Niño climate impact is expected to transition from the current dry conditions to wetter weather over the next two months, the committees held an extensive discussion on measures to address the anticipated change in weather conditions.
The committees decided to raise public awareness on potential disasters, including floods and landslides that could occur due to increased rainfall. Attention was also given to conducting disaster preparedness drills to familiarise the public with the appropriate measures to be taken in the event of such emergencies.
It was instructed that initial preparedness drills be conducted in the districts of Kandy, Badulla, Matale and Nuwara Eliya, which are considered vulnerable to landslides and that the necessary measures be taken without delay.
The meeting also decided to implement a public awareness programme through electronic and print media. Discussions were also held on the importance of preparing the public in advance by establishing operational centres at Divisional Secretariat level.
In addition, the committees reviewed the progress of relief measures already being implemented for people affected by the prevailing El Niño conditions, as well as the progress of the planned measures ahead.
Minister of Housing, Construction and Water Supply Dr Susil Ranasinghe, Minister of Plantation and Community Infrastructure Samantha Vidyaratne, Secretary/Convener of the Special Cabinet Subcommittee, Chairman of the Officials’ Committee and Chief of Staff to the President Prabath Chandrakeerthi, Secretary to the Ministry of Agriculture, Livestock, Land and Irrigation D. P. Wickramasinghe, Director General of the Department of Meteorology A. L. K. Wijemanne, Director General of the Disaster Management Centre, Major General Sampath Kotuwegoda (retired), Director General of the National Building Research Organisation Dr Gamini Jayatissa, General Manager of the National Water Supply and Drainage Board Engineer T. Bharatheedasan and officials from the relevant institutions were also present at the meeting.
[President’s Media Division]
News
Where is Gnanasara Thera?Police pass buck to court
by Norman Palihawadane
Bodu Bala Sena (BBS) General Secretary Ven. Galagoda Aththe Gnanasara Thera’s whereabouts have remained unknown since the Supreme Court, on Monday, annulled a presidential pardon granted to him in 2019.
Prison officers visited the Thera’s temple in Nawala, Rajagiriya, to take steps to return him to prison to serve the unexpired portion of his six-year sentence. However, monks at the temple had reportedly informed the officials that they were unaware of his whereabouts.
Police spokesman ASP F.U. Wootler said a separate court order was required for the police to trace the Thera, or assist in taking him into prison custody. No such order had been issued so far, he claimed.
Meanwhile, sources close to Gnanasara Thera said he was expected to attend a book launch in Colombo tomorrow (17),
The development follows the Supreme Court declaring the 2019 presidential pardon granted to Gnanasara Thera, by then President Maithripala Sirisena, null and void.
A three-member Supreme Court bench held that the pardon had been granted arbitrarily and violated public trust and principles of natural justice.
Gnanasara Thera had been serving a six-year prison sentence for contempt of court when the then President Sirisena granted him the pardon, in May, 2019. He had served only about nine months of the sentence at the time.
With the pardon annulled, the original sentence remains in force and the Thera is now required to serve the balance of his six-year term.
The Supreme Court ruling has raised questions over the procedure to be followed to return him to prison, with police and prison authorities yet to take custody of him.
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