By: Staff Writer
Colombo (LNW):Treasury Secretary Mahinda Siriwardene has made a clarion call to every citizen to strive diligently to rebuild and put the economy on a stable trajectory beyond the International Monetary Fund (IMF) program.
Noting that Sri Lanka has progressed substantially from last year, with the implementation of corrective measures and monetary tightening, the Treasury Secretary emphasized staying the course to achieve sustainable economic development beyond the IMF program.
Siriwardena also said the tight expenditure controls and inflation helped Sri Lanka over-perform its primary deficit target for 2022 in an interim budget created ahead of the IMF program.
“Sri Lanka was asked to maintain a 4% primary deficit, but we ended with a 3.8% of gross domestic product (GDP) for 2022. However, this included lending to the Ceylon Petroleum Corporation of $ 700 million and had it not been there we could have ended about 2.7% of the GDP,” he added.
Sri Lanka’s recovery from the crisis now hinges on timely progress on debt relief and implementation of economic reforms.
The needed reforms include enhancing domestic resource mobilization, improving the performance of state-owned enterprises, strengthening public financial management, encouraging private sector activities, strengthening anti corruption legislation, building strong institutions, and increasing transparency.
However, he said cash flow management remains a very tedious and challenging task without sufficient State revenue inflows.
In 2022, Sri Lanka’s economy contracted by 7.8% and is further expected to shrink by 3% in 2023 as it continues to grapple with the challenge of debt restructuring and balance of payments difficulties.
“We receive around Rs. 160 to 170 billion each month as tax revenue, but the State expenditure is around Rs. 193 billion. The State sector salaries are the biggest, which is about Rs.93 to 94 billion.
Then another Rs. 30 to 35 billion is for pensions and social welfare Samurdhi payments. For services particularly for the health sector to import medicines we need about Rs. 7 to 10 billion,” he explained.
Despite the significant adjustments made to meet the revenue target, he said last year the Treasury saw a considerable tax revenue increase which was about 20% of the total revenue, amidst a very high nominal GDP.
“We did not see a significant increase in tax revenue as a percentage of the GDP in 2022, but this year we have seen a considerable improvement especially indirect taxes like VAT,” he said.
The Treasury Secretary, however, was concerned if Sri Lanka would be able to make the annual revenue target, adding that it remains the main concern of the Government.
He also said steps are being taken to introduce the Public Finance Management Bill, whilst noting that the Policy Framework of the Government will be announced by the end of the month.
On the Cabinet decisions to file a case in a Singapore Court against the X-Press Pearl vessel owners, Attorney-at-Law/Legal Counsel, an expert in Law of the Sea and Maritime Law Dr. Dan Malika Gunasekera said, going to Singapore has its disadvantages for Sri Lanka as there are many International Conventions that apply in Singapore, as opposed to Sri Lanka.