News

Tissa Vitarana opposes going to IMF at All Party confab

Published

4 years ago

2022/03/27

Calls for 50% tax on income between Rs. 400,000 and Rs. 1 million

I am glad that this conference is being held when Sri Lanka is faced with one of the worst economic crises since independence. Before getting onto my speech, I wish to thank the President and Prime Minister for holding this meeting. Further, the presence of members of the Opposition is also welcome. This is a signal of the readiness of the Opposition to cooperate with the Government to overcome the crisis, as one nation.

However, I strongly disagree with the view that both the Government and the Leader of the Opposition hold that the solution lies only through the IMF (International Monetary Fund). The IMF solution will only lead to a further loss of dollars through the unrestricted opening of the economy to more imports and also lead to increased debt due to taking further loans.

It would have been better to have had an earlier meeting of the Government party leaders so that agreement on policy matters could have been reached among ourselves in the Government. I would support the view of the Tamil speaking MP’s that national unity is essential and could be achieved by fully implementing the 13th Amendment to the Constitution.

Due to shortages and high prices of basic essentials, most of them imported, like fuel (oil and gas), medicines and food, life has become a misery for most of the people (perhaps other than the super-rich). The knock on effects e.g. shortage of electricity, have added to the misery. The root cause is the shortage of US dollars (USD). The Foreign Exchange Reserve which was maintained at USD 7-8 Billion has come down to less than USD 1 Billion. This has led to our Fitch Rating dropping to 2C (1C means bankruptcy). The real value of the rupee has dropped from 200 to a dollar, to 285 per dollar. This has led to the non-acceptance of Letters of Credit (LC) from Sri Lanka by foreign suppliers. As a result it is only after payment in dollars that goods are sent from abroad, which means a delay of several months. But due to the shortage of dollars in the country this cannot be done even in time.

A similar crisis occurred during the 1970-75 SLFP/LSSP/CP Coalition Government. With the formation of OPEC, oil prices rose by more than five times and a ton of sugar went up from £ 42 to £ 600. The JVP insurgency damaged the economy and added to the cost to the country.

Dr.N.M.Perera, then Finance Minister, overcame the crisis and raised the Foreign Reserves from USD 1.3 Billion in 1970 to USD 2.7 Billion by 1975, thereby stabilizing the economy and providing sufficient US dollars for our essential imports. He strictly banned non-essential imports thereby reducing the foreign exchange deficit, which is the main cause of the lack of dollars. He encouraged the development of local industry and agriculture.

Since 1977 the UNP came to power with its neoliberal economic policies. These have been operative since then. These were designed by the USA (led by Prof. Friedman of the Chicago School of Economics), to continue to exploit the world’s resources (specially countries of the Third World, like Sri Lanka) to the advantage of the USA and its imperialist allies in the post-colonial era. This open economy, promoted by the WTO (World Trade Organization), which the UNP and its allies in Sri Lanka strongly support, led to unlimited import of luxury and other non-essential goods. The result was that the foreign exchange deficit was at time double the export income.

This ate into our reserves and also led to massive foreign borrowing. Successive Governments, the UNP more than the SLFP, went into both short and long term borrowing, often at a high interest rate. Last year alone Sri Lanka had to pay USD six billion for debt servicing. The question then is how can we pay this amount when our reserves are so low.

The only way out is to get a moratorium from our creditors, that is ask for time to delay the payments for a period of about five years. This would mean for this period we will have USD 30 Billion, to put our economy right and also immediately fund the import of essentials, with the restoration of LCs. This has been done by several countries in the course of past crises. I am told that Argentina and Uruguay among other countries have done so this time too.

Our solution should ensure that we do not increase our debt, a root cause of our problems. This would be the inevitable outcome of turning to the IMF for assistance. Further the IMF policy of unlimited imports would put us into deeper debt.

Concrete measures should be taken to rationalize our import structure. Nearly 25% of our dollars is allocated to the import oil and gas. The latter requirement can be effectively minimized by domestic bio-gas production using cookers produced by the NERD institution. Fuel should be rationed giving priority to public transport. There should be a total ban on non-essential imports. Other selected items should be subject to heavy taxes.

This is a better solution than the issuing of permits, which leads to corruption. Foreign inputs required for industrial production for exports should be permitted. Promotion of science, technology and research for value added industries using local raw material should also be supported.

The tax system should be drastically revised as indicated in Table 1.

As an incentive, company taxes should remain low only for value added industries, that use local or foreign raw materials, especially for export and import substitution. Unfair exploitation of local human and material resources must be minimized, especially for the local market. Incentives must be given for tourism and remittances from abroad. Indirect taxes must be minimized.

The adoption of a floating exchange rate system is a progressive step in the present context. The public and private loss making institutions can be made profitable like in Kerala, India by utilizing the “Solidarity Principle”. Here the ownership of an enterprise is given to the employees and the profit is shared equally among them. Stop taking inflated foreign loans. The above changes should be associated with a wage-price freeze (which led to the success of Roosevelt’s “New Deal”).

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President chairs discussion on 2027 Budget Proposals for the Ministry of Industry and Entrepreneurship Development

Published

10 hours ago

2026/07/16

Priyan

A pre-Budget discussion to review the progress of projects implemented under the 2026 Budget allocations for the Ministry of Industry and Entrepreneurship Development and to discuss proposals for the 2027 Budget was held under the patronage of President Anura Kumara Dissanayake at the Presidential Secretariat on Monday (13) afternoon.

The progress of projects implemented by each division of the Ministry of Industry and Entrepreneurship Development and the institutions under its purview using the 2026 Budget allocations, as well as proposals for the 2027 Budget, were reviewed separately during the discussion.

The President also focused on the current status of the programme to establish industrial zones in areas including Dambulla, Ingiriya, Valachchenai, Millaniya and Katunayake. Discussions centred on issues that have arisen in allocating land and developing infrastructure, including electricity, water and roads, as well as the urgent measures required to resolve these issues.

President Dissanayake instructed officials to make every effort to complete all projects already initiated under the Ministry of Industry and Entrepreneurship Development within the stipulated timeframes. He also highlighted the need to clearly identify the Government’s role and limitations in relation to the industrial sector.

Attention was also drawn to the current situation regarding the development of state-owned enterprises, while issues affecting the sugar and salt industries and alternative proposals to address them were also discussed.

The current status of the process to consolidate institutions under the Ministry of Industry and Entrepreneurship Development was also reviewed. The President pointed out that large institutions had been established at different times to meet various needs, ultimately creating a situation in which such institutions had to be maintained using taxpayers’ money.

He stressed that the consolidation of these institutions should not only improve their efficiency but should also result in a relative reduction in operational expenditure compared with the costs incurred prior to consolidation.

Officials also briefed the President on the proposal to establish the Entrepreneurship and Industry Transformation Authority (EITA) and the programme proposed under the Authority.

Attention was also focused on the challenges faced by exporters and industrialists in carrying out their activities. The President instructed officials to submit proposals on general concessions that could be provided to encourage exporters and industrialists.

The President further pointed out that Sri Lanka could develop distinctive expertise by identifying several key areas within the industrial sector and providing the facilities necessary for their development.

Minister of Industry and Entrepreneurship Development Sunil Handunnetti; Minister of Labour and Deputy Minister of Finance and Planning Anil Jayantha Fernando; Deputy Minister of Industry and Entrepreneurship Development Chathuranga Abeysinghe; Secretary to the President Dr Nandika Sanath Kumanayake; Chief of Presidential Staff Prabath Chandrakeerthi; Senior Additional Secretary to the President Russell Aponsu; Secretary to the Ministry of Finance, Planning and Economic Development Dr Harshana Suriyapperuma; and Secretary to the Ministry of Industry and Entrepreneurship Development Thilaka Jayasundara, along with officials from the Ministry of Finance and the Ministry of Industry and Entrepreneurship Development, participated in the discussion.

[PMD]

News

Prime Minister meets the Amir of the State of Qatar and conveys condolences on the passing of the Father Emir

Published

10 hours ago

2026/07/16

Priyan

Prime Minister Dr. Harini Amarasuriya, visited the State of Qatar to convey condolences on the passing of the Father Emir, at Lusail Palace in Doha on Wednesday (15 July).

Upon her arrival, the Prime Minister was received by His Highness Sheikh Khalifa bin Hamad bin Khalifa Al Thani, Minister of Interior of the State of Qatar. The Prime Minister subsequently met with His Highness the Emir of the State of Qatar, Sheikh Tamim bin Hamad Al-Thani.

During the meeting, Prime Minister Dr. Harini Amarasuriya conveyed to the Emir the deepest condolences of the Government and the people of Sri Lanka on the passing of the Father Emir, Sheikh Hamad bin Khalifa Al Thani.

The occasion was attended by the Deputy Emir of the State of Qatar Sheikh Abdullah bin Hamad Al Thani; Prime Minister and Minister of Foreign Affairs, Sheikh Mohammed bin Abdulrahman bin Jassim Al Thani; Hassan bin Abdullah Al Ghanim, Speaker of the Shura Council; senior members of the Royal Family.

[Prime Minister’s Media Division]

News

Current El Niño Status in Sri Lanka

Published

21 hours ago

2026/07/16

Priyan

At present, El Niño conditions have developed and are classified as being at a weak level. Forecasts indicate a 63% probability of a very strong El Niño event developing during the period from November 2026 to January 2027. According to the National Oceanic and Atmospheric Administration (NOAA), there is approximately a one-third probability that El Niño will remain below a very strong intensity.

Typical Climatic Conditions Associated with El Niño
Based on analyses of past El Niño events that occurred between 1950 and 2025:
• Rainfall during July and August may be below normal, particularly in the dry zone areas.
• From October onward, rainfall is generally expected to be above normal.
• If a positive Indian Ocean Dipole (IOD) develops, enhanced rainfall conditions may continue until December.

Sectors Requiring Attention
• Appropriate measures should be taken for water resource management during July and August.
• Increased rainfall expected from October onward may lead to floods and landslides, requiring preparedness and close monitoring. The forecasts are important for sectors such as, Agriculture /Water management /Livestock /Health /Energy /Other climate-sensitive sectors
• Attention should be paid to official information issued by the Department of Meteorology.

Actions by the Department of Meteorology
The Department of Meteorology continuously monitors the evolving situation and issues:
• Weekly and monthly seasonal forecasts and Monthly analyses of rainfall data to monitor meteorological drought conditions.
As weather conditions are influenced not only by El Niño but also by other climatic factors, updated forecasts and advisories are regularly shared with relevant stakeholder organizations (Irrigation/ Water Management Committee /Department of Agriculture/National Building Research Institute/Disaster Management Centre (DMC)/Ministry of Health /Sri Lanka Land Development Corporation…etc). The Department also provides technical support to the committee established through a Cabinet decision to address climate-related impacts. The Department’s monthly rainfall outlook for July to September 2026 is attached

Monthly Rainfall Forecasts for July, August and September 2026
Month Rainfall forecast
July 2026

During July 2026, there is a higher probability of having near normal rainfall across most parts of the Western and Southern Provinces. The remainder of the country is expected to experience below normal rainfall.

August 2026

There is a higher probability of having below normal rainfall across most parts of the country during month of August 2026.

September 2026

There is a possibility of above-normal rainfall across most parts of the Western and Southern Provinces, while near-normal rainfall is expected in the Sabaragamuwa Province. Below-normal rainfall is likely in the remaining areas during September 2026.

Note: These long-range forecasts may change due to strong day-to-day atmospheric variability associated with the movement of weather systems such as atmospheric disturbances, low-pressure areas, and depressions, as well as intra-seasonal oscillations such as the Madden–Julian Oscillation (MJO). Therefore, in addition to the weekly and monthly forecasts, it is important to pay attention to the Department’s official announcements, weather advisories and warnings, as well as the daily weather forecasts issued by the Department of Meteorology.