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Government instills business confidence bringing down inflation

By: Staff Writer

March 05, Colombo (LNW): The government has instilled business confidence in Sri Lanka by maintaining a single digit inflation rate, said State Finance Minister, Shehan Semasinghe.

He said that this was at around 70% last year and prudent and systematic steps were taken to reduce it gradually. This is expected to be retained fewer than 5% throughout the year.

In its March edition, leading business magazine LMD reports that “the gauge of corporate sentiment remains steady, albeit that it is way short of its all-time average.”

LMD notes, “The LMD-PEPPERCUBE Business Confidence Index (BCI) continues to be lacklustre… but steady; it has remained in the 81-85 range for three successive months.

“In February, the index registered a one basis point dip to 81, which is a massive 42 notches shy of its all-time average (123) although compared to 12 months ago (63), the barometer has in fact gained 18 points,”

It notes that PepperCube Consultants attributes the dip in the index to the impact of the VAT hike, “There is a degree of buoyancy regarding the investment climate and expectations about maintaining sales volumes have remained relatively unchanged over the past four weeks – this despite the marginal drop in optimism regarding the economy over the next 12 months.”

LMD says that “the BCI is unlikely to gain any substantial ground at least until there’s clarity on the timing and conduct of one more election this year.”

A spokesperson for LMD explains, “As we said last month, the index is unlikely to gain any substantial ground at least until there’s clarity on the timing and conduct of one more election this year.”

She cites the President’s Media Division’s recent text alert that “the presidential election will be held within the mandated period and according to the current timeline, general elections will be held next year.”

LMD’s publisher, Media Services, says the latest edition of the magazine will be released shortly. Its digital version has been shared on the publisher’s social media platforms (the full BCI report will be uploaded on its website – www.LMD.lk).

State finance  Minister Semasinghe  also said that government revenue is increasing and there is also a sharp increase of new tax payers.

“The total number of registered taxpayers in 2019 was 1,705,233. It decreased to 677,613 in 2020 due to various precedent decisions.”

“In 2021, it was 507,085. We have succeeded in raising the number of tax files from 437,547 in 2022 to one million. Also, the state’s income will be Rs. 3110 billion in 2023.”

 He predicted that Sri Lanka’s economic growth will be 1.7% in the third quarter of 2023. Accordingly, the overall economic growth in 2023 will be around -3%.“But it should also be said that the overall economic growth in 2022 was -11%.”

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