The Sri Lankan government is poised for a crucial vote on the Second Reading of the 2024 Appropriation Bill, also known as the 78th Budget Speech, slated for this evening, November 21.

Presented to the House by President Ranil Wickremesinghe on November 13, in his dual role as the Minister of Finance, Economic Stabilization & National Policies, the budget proposals for the fiscal year 2024 mark a significant stride in the country’s fiscal planning. The President’s speech highlighted the budget’s transformative potential, emphasizing its role in realigning Sri Lanka’s economy with global trends and setting a foundation for future growth.

Debate on the budget commenced on November 14 and enters its seventh day today. The Committee Stage, or Third Reading debate, is scheduled for 19 days, starting from November 22 to December 13, excluding Sundays. The final vote on the Third Reading is fixed for 6:00 p.m. on December 13, 2023.

Titled “A Prelude to a Bright Future,” the 2024 Budget outlines ambitious revenue and budget deficit targets. The government projects a budget deficit of Rs. 2,851 billion, equating to 9.1% of the GDP, a rise from the revised 8.5% in the current year and above the initial target of 7.9% for 2023.

Projected total revenue stands at Rs. 4,107 billion, including tax revenue of Rs. 3,820 billion. The total expenditure for 2024 is set at a record Rs. 6,978 billion, up by nearly 33% compared to 2023. This includes a significant increase in capital expenditure and Rs. 450 billion allocated for bank recapitalization.

The government has earmarked Rs. 5,277 billion for recurrent expenditures such as subsidies and salary payments, with Rs. 1,127 billion for salaries and wages, and Rs. 1,158 billion for subsidies and transfers.

A notable allocation in the 2024 Budget is Rs. 3,000 billion reserved for restructuring foreign debt and repaying international sovereign bonds. Additionally, a proposal to raise the debt ceiling by Rs. 3,450 billion to Rs. 7,350 billion, up from Rs. 3,900 billion, has been made.

President Wickremesinghe’s call for cross-party cooperation reflects the need for a united front to navigate the country through these challenging economic reforms.

By: Staff Writer

Colombo (LNW): SLT Mobitel has gone to courts opposing the proposed merger of Dialog and Airtel citing the latter is monopolistic and would seriously jeopardise its viability.

The sale of SLT Mobitel’s majority stake of 50.23% stake has hit a roadblock in view of the State controlled firm’s mobile brand taking the Telecommunications Regulatory Commission (TRC) to Court opposing the proposed merger of Dialog and Airtel.

Early this month, the Finance Ministry issued Request for Qualification (RfQ) from interested parties to acquire a 50.23% stake in Sri Lanka Telecom (SLT).

The invitation to pre-qualify and bid for SLT is now on. Analysts said the on-going litigation which highlights possible loss of mobile telecom business of State-controlled entity, would impact the valuation of SLT.

This notice in November however came despite Mobitel in late June challenging the proposed merger between Dialog and Airtel in Sri Lanka and possible combination of spectrum estimated at 52% of allocated spectrum as illegal; wrongful; and unlawful among other factors.

SLT sale suffers ‘signal drop’ with Mobitel going to courts against Dialog-Airtel merger claiming that 64% combined market share of amalgamated Dialog-Airtel entity is monopolistic and seriously jeopardise its viability

It stresses TRCSL is duty bound to prevent monopolies and uphold interests of consumers.

SLT Mobitel has challenged in Court of Appeal possible combination of spectrum allocated 52% of total to Dialog and Airtel alleging yje move is unlawful, utterly injurious and constitute a violation of conditions in spectrum licences.

It also claims that law demands if merging and Airtel ceases to operate, should surrender spectrum allocation to TRCSL and such surrendered spectrum be reallocated amongst all existing operators according to law

SLT Mobitel opined profit motive of the monopolist would be to initially reduce price to drive out competitors and thereafter increase price after capturing the market

It Insists telecommunication is an essential public service and is of fundamental importance that multiple competing operators exist so that acceptable service levels and pricing will be available to public

Following SLT Mobitel’s petition and respondents filing their answers, the matter is now subject to discussion among relevant parties to reach an agreement for equal distribution of spectrum enjoyed by Airtel. If no agreement, the matter will be taken up in the Court of Appeal next month.

In May, Dialog Axiata PLC announced that it has entered into a binding term sheet to combine operations of Airtel and the discussions were ongoing.

The proposed transaction is subject to signing of definitive agreements and necessary closing conditions including applicable regulatory and shareholder approvals.

In the Court of Appeal case, Mobitel Ltd., and its Chief Operating Officer Sudarshana Geeganage are the petitioners and the respondents are 1) TRCSL, 2) Dialog Axiata, 3) Dialog Broadband Networks Ltd., 4) Bharti Airtel Lanka Ltd., and 5) Sri Lanka Telecom PLC.

Colombo (LNW): The government plans to acquire sugar stocks previously imported at a 25-cent levy and sell them through Lanka Sathosa, supermarkets, and Cooperative outlets at a fixed price of Rs. 275 per kilogram within a month, Trade Minister Nalin Fernando announced.

The Cabinet has approved this initiative to address the sugar shortage in the market.

The identified sugar stocks will be allocated to Lanka Sathosa, other supermarkets, and selected cooperatives for regulated sale.

Once the government takes over these stocks, the controlled price on sugar will be lifted, as future sugar imports will be subject to a special commodity levy of Rs. 50, the Minister noted during a briefing in Colombo.

Colombo (LNW): Immediate measures should be implemented to reclaim “stolen assets” as a means to repay loans and revive the economy, following the recent Supreme Court ruling on the country’s economic crisis, stated former president Chandrika Bandaranaike Kumaratunge.

In a social media video, she commended the rare and significant Supreme Court verdict, highlighting that penalties were not imposed on the parties mentioned as the petitioners did not seek such action.

Kumaratunge urged citizens affected by the crisis to seek redress in court, emphasising the possibility of recovering funds from offshore accounts and assets to compensate those impacted.

She cited the World Bank’s specialised unit for recovering stolen assets as a potential resource for assistance in this regard, drawing parallels with successful efforts in the Philippines.

1. SL’s International Bond prices fall on news that Zambia has suffered a major setback in its debt restructuring efforts due to objections from Official Creditors, including China: disagreement mainly on whether the initial deal with a group of bond-holders in Oct’23 offers comparable debt relief from bilateral & commercial lenders: Zambia defaulted 3 years ago and its restructuring has been beset by delays, while SL defaulted one and a half years ago.
2. Trade Minister Nalin Fernando says Cabinet has decided that the Govt takes over stocks of sugar which were cleared from the Port before the sugar import tax was hiked from 25 cents to Rs.50 per kg: also says the Cabinet decided to distribute the sugar via Lanka Sathosa to selected markets to be sold at Rs.275 per kg.
3. Power and Energy Minister Kanchana Wijesekera says the Cabinet has approved the proposed Electricity sector reforms and the new Bill will be gazetted & presented in Parliament for approval.
4. Women & Child Affairs Minister Geetha Kumarasinghe says a staggering number of 2,087 teenage mothers have been reported in SL.
5. Trade Minister Nalin Fernando says the Cabinet has consented to the import of 100,000 MT of rice due to the prevailing shortage of Keeri Samba rice in the market.
6. Health Ministry Medical Supplies Division Director Dr Kapila Wickramanayake, Assistant Director, Accountant-Supplies & Stock Controller arrested by the CID pertaining to the alleged importation of sub-standard Immunoglobulins: remanded until 29th November.
7. Management Faculty of the Sri Jayawardenepura University closed indefinitely, after a protest was staged at the university premises against the suspension of 6-students: suspension was due to an alleged incident of ragging, say the University authorities.
8. Fitch Ratings says the rising gold-backed lending among SL’s Non-Bank Financial Institutions sector is exposing financiers to higher collateral price risk & making them more susceptible to any adverse movements in gold prices:
   SL NBFIs have grown gold-backed loans rapidly in the past several years amid shrinking demand for their core “vehicle financing business”: gold-backed loan balances more than quadruple in the sector’s gross loans, up from 4% at the end of FY19 to 18% now.
9. Govt revenue in the first 8 months increases by 43.5%: but the budget deficit increases even higher, forcing the Govt to impose more taxes to deliver the IMF targets: IMF has already cited the “limited progress on the revenue front” & held back the release of the 2nd tranche.
10. Agriculture Minister Mahinda Amaraweera instructs the Tea Small Holdings Development Authority to promote a high-density tea cultivation system & use new technology to increase yields.

W.M.G. Kumaratunge, Director of the Presidential Secretariat Economic Development Stabilization Unit, revealed that as of last Friday, the Government had amassed Rs. 2,394 billion in revenue. With nearly 30 working days remaining in the year, the projection is to surpass the unprecedented Rs. 3,000 billion mark, setting an all-time record.

During a special post-Budget session organized by the State Ministry of Finance, Kumaratunge attributed this milestone to the adoption of new IMF guidelines, an expanded taxpayer base, enhanced operational efficiency, and rigorous government oversight.

Highlighting the revenue contributors, Kumaratunge noted that the Inland Revenue Department led the collection, accounting for Rs. 1,415 billion, constituting 84 percent of the total tax revenue. Sri Lanka Customs followed with Rs. 1,667 billion, and the Excise Department with Rs. 217 billion.

Expanding on revenue generation, he projected the government’s total tax and revenue collection to exceed Rs. 3,063 billion by year-end, aiming for even stronger revenue figures in the coming year.

In a related context, State Minister for Finance Shehan Semasinghe clarified that while individuals are required to initiate a tax file during specific transactions like vehicle registration, land transactions, or obtaining revenue licenses, not all will continuously pay taxes. The Inland Revenue Department will assess and exempt certain individuals from tax obligations.

Adding to the discussion, Dr. P.K.G. Harischandra, Director of the Central Bank Economic Research Department, forecasted a positive economic growth rate of approximately 1.6 percent for Sri Lanka starting from the third quarter of 2023. This follows a period of negative growth, around 6.8 percent, in the initial two quarters of the year.