Saturday, June 25, 2022

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Finance Ministry embarks on economic crisis control initiative   

Sri Lanka’s Finance Ministry is taking  every possible step to enhance revenue even under the current situation of socio-political instability to save the people from impending starvation  in food shortage and high inflation as a  result of unproductive decisions and poor economic management  .

This situation has now been rectified  and necessary measures have been taken to secure short-term financing, from both domestic and foreign sources for day-to-day operations until a longer-term solution is reached.

. Persistent losses of related state owned business enterprises (SOBEs) add to the burden of the fiscal sector through contingent liabilities and loss of revenue while also creating significant financial pressures on the financial sector, latest report on Fiscal Sector  Present Situation and Way Forward compiled by the finance ministry  revealed.  . 

Given the financial situation of the country, divestment of underutilised and nonstrategic state assets, including unproductive SOEs, will also be required, it add  

Given the tighter fiscal and monetary conditions, along with more market-based pricing, robust social safety nets must be designed and implemented. All social security payments must be based on objective criteria and made in a transparent manner using digital processes. 

Digital technology will be crucial in revenue enhancement and expenditure rationalisation measures as well. Clear communication with the public, business and investor communities on all these measures will be important to ensure a sustained reform process, finace my document highlighted. 

 It is also important to foster the understanding that government expenditure on public services and welfare comes at the expense of higher levels of taxation or continued borrowings. 

Sri Lanka can no longer afford to run high budget deficits, and whilst there is a requirement for greater investment in sectors such as education, healthcare, public transport, and service delivery, there are several aspects of government expenditure that require rationalization.

 It is observed that a culture of unproductive government subsidization and handouts is no longer viable. Instead, a stable macro-economic environment which empowers citizens to thrive along with the necessary social protection mechanisms, would result in a more stable and sustainable economic outcome.

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