By: Staff Writer

Colombo (LNW): Sri Lanka expects to host 1.55 million visitors and earn 2.7 billion Sri Lankan rupees ($8.4 million) in much-needed tourism revenue this year, as it maps a road to the recovery of its tourism sector amid its worst economic crisis in decades.
This is up from the 720,000 tourists it welcomed in 2022, but still below the record 2.3 million visitors that flocked to the country in 2018, Padma Siriwardana, managing director of the Sri Lanka Tourism Promotion Bureau said on the sidelines of the Arabian Travel Market in Dubai.

The sector is on target to achieve its annual goal after receiving 450,000 visitors this year to the end of April, she said.

“We are back on track for recovery. We are coming out stronger because our industry is very resilient,” Ms Siriwardana said.

The recovery comes after the country’s tourism sector suffered several setbacks: the Easter attacks in 2019, the two-year Covid-19 pandemic and widespread street protests in 2022 in response to an unprecedented economic crisis that led to severe shortages of food, medicine, fuel, cooking gas and electricity.

Sri Lanka’s economy contracted by 8.7 per cent in 2022 and is forecast to shrink by another 3 per cent this year.

Inflation hit an average of 46.4 per cent in 2022, affecting mostly the poor and vulnerable, but is expected to come down to 28.5 per cent this year, the International Monetary Fund said.

Underpinning recovery in the tourism sector are Sri Lanka’s efforts to promote “niche” offerings to attract high-spending visitors from countries such as Japan, Ms Siriwardana said.

Beckoning tourists to the island are marine explorations to discover more than 100 shipwrecks along its coast, a 22-day hike through the mountains on its Pekoe Trail and wellness programmes.

“The post-Covid traveller is into new experiences,” she said. “We started a campaign targeting our main wellness markets, France and Germany, to promote authentic Sri Lankan wellness.”

In March, the IMF approved a $3 billion bailout loan to help the island nation of 22 million people to restructure its debt and address its crisis-hit economy.

Asked if the tourism industry will be one of the beneficiaries of the incoming funds, Ms Siriwardana said: “Part of it will be for the tourism industry. Some of the donors have committed to giving more funds for tourism investment.”

While the tourism board has sufficient funds to launch international promotional campaigns, it had difficulty last year with marketing spend abroad due to the country’s foreign currency shortage, but “now it’s definitely getting better”, she said.

By: Staff Writer

Colombo (LNW): Link Natural, a subsidiary of the CIC Group, has partnered SriLankan Airlines, the national carrier, to introduce Link Samahan, a trusted herbal drink, as an onboard beverage choice.

Link Natural is a leading manufacturer and marketer of herbal healthcare and herbal personal care products in addition to ayurveda pharmaceuticals. Its flagship brand, Link Samahan, is a 100% natural authentic herbal drink.

It was formulated with 14 trusted ayurvedic herbal ingredients that have been used traditionally over centuries to enhance the health & well-being and supports immunity when consumed regularly. Moreover, it can be conveniently consumed in hot water, tea or coffee depending on the consumer’s preference.

Link Samahan will be served on board SriLankan Airlines’ medium and long-haul flights. Passengers can now enjoy a cup of the healthy herbal drink, which promotes wellness and health.

The company prides itself on the state-of-the-art modern Research and Development Centre providing the core of research, product formulation and development ensuring stringent quality and regulatory standards.

The facility is also US Food and Drug Administration (FDA) audit compliant maintaining high standards for Good Manufacturing Practices which supports the brand reaching global markets.

Today, Link Samahan is available in over 30 countries and has won the confidence of consumers across the globe. Product has been recently endorsed by world-renowned British supermodel Naomi Campbell in her interview with Vogue India.

As milestones in its growing international journey, Link Samahan has gained approval to be marketed at Costco Wholesale stores in Japan, Lulu supermarkets in the Middle East and Amazon.com in the USA.

In addition, locally discerning consumers have access to Link Natural’s wide product range and wellness mantra through its recently launched exclusive experiential centre “Swastha by Link Natural” located at No. 6, Maitland Crescent, Colombo 7.

Link Natural, for many years is home to internationally trusted and time-tested products such as Samahan, Sudantha, Swastha Amurtha, Swastha Triphala, Musclegard, SP Balm, Kesha etc., that have provided consumers with holistic wellness for generations.

Earth Essence, consisting of a complete range of herbal personal care products, is the company’s latest introduction to the retail market.

Link Natural Products International Business Manager Chathurangi Perera stated: “Link Samahan offers customers a novel in-flight experience – a herbal drink which is highly appreciated for its health benefits enabling passengers to remain hydrated, healthy and comfortable.

It is a matter of pride for our company and for Sri Lanka that we are showcasing a celebrated Sri Lankan brand to a global audience.

By: Staff Writer

Colombo (LNW):The Asian Development Bank (ADB) will be supporting Sri Lanka and other Asia and the Pacific address issues pertaing to climate change and conserve environment with out polluting the air with carboin emmsions.
The funds will go to the Innovative Finance Facility for Climate in Asia and the Pacific, through which the ADB plans to extend loans of up to US$15 billion for incentivizing action on the issue in a region that is vulnerable to climate-related disasters.

Japan will contribute $25 million to help countries in the Asia-Pacific region address the issue of climate change via a new financing mechanism by the Asian Development Bank.

Realizing the impending necessity to address the impact of climate change on the island nation, the Sri Lankan Government has collaborated with the Asian Development Bank (ADB) to develop a national adaptation strategy to mitigate the effects of a changing climate.

The Asian Development Bank (ADB) is supporting the Government of Sri Lanka’s initiative to focus on climate change adaptation through the provision of a technical assistance (TA) grant titled “Strengthening Capacity for Climate Change Adaptation.

The assistance is provided through the Climate Change Secretariat (CCS) of the Ministry of Environment and Natural Resources (MENR).

“In recent years, the region has frequently suffered damage from extreme weather events and large-scale natural disasters caused by climate change.

Therefore, a balanced approach toward adaptation, in addition to mitigation measures, is also essential,” Finance Minister of Japan Shunichi Suzuki said at a meeting of the ADB’s board of governors.

Suzuki also emphasized the need to achieve “ambitious” net zero emissions targets while preventing or managing trade-offs between climate action and other important development objectives in areas such as health and education.

Besides Japan, Denmark, South Korea, Sweden, Britain and the United States are the initial partners of the ADB’s new financing scheme.

More than 40 percent of all climate-related disasters that have occurred in this century took place in the Asia-Pacific region, according to the ADB, which has set a goal of providing $100 billion in climate financing to developing member states between 2019 and 2030.

Climate change is among the key agendas for Japan, which holds the rotating presidency of the Group of Seven. Other areas considered important include issues related to debt and the provision of universal health coverage.

• Recurrent expenditure increases by 28% to Rs. 3.5 t fuelled by hike in domestic interest payments; salaries and wages and welfare
• State revenue crosses Rs. 2 t mark with Rs. 548 b or 38% rise over 2021
• Income taxes biggest revenue source; up 77% to Rs. 534 b and relegates VAT to second place at Rs. 463 b, up 50% from in 2021
• CBSL profit transfer doubles to Rs. 30 b in 2022

DailyFT: Government expenditure in December had swelled by Rs. 1 trillion despite the country declaring bankruptcy, a cash-strapped Treasury and multiple curbs on public sector spending.

The spike in December saw overall expenditure in fiscal year 2022 (January to December) increase to Rs. 4.47 trillion.

In the first 11 months, cumulative expenditure amounted to Rs. 3.41 trillion. However in comparison to Rs. 3.52 trillion expenditure in 2021, the last year’s performance reflects a Rs. 950 billion increase or 27%.  

The increase in expenditure was attributed to higher domestic interest payments following the increase in interest rate and lending to State Owned Enterprises.

In terms of earnings, Government revenue crossed the Rs. 2 trillion mark for the first time finishing 2022 at Rs. 2.01 trillion as against Rs. 1.46 trillion in 2021 reflecting a Rs. 548 billion increase or a robust 37.5%.

In November 2022 Government rose by Rs. 220 billion whilst in December it gained by only Rs. 173 billion.

The spike in November and overall increase in 2022 was aided by upward revisions in taxation, improved enforcement and retrospective one-off surcharge tax collection. Tax revenue rose to Rs. 1.75 trillion in 2022 from Rs. 1.3 trillion in 2021 whilst non-tax revenue grew to Rs. 228 billion from Rs. 159 billion.

As per the Interim Budget 2022, the Government revenue to GDP target for the year was revised to 8.8% but achieved only 8.3%.

According to the Central Bank 2022 Annual Report, revenue from income taxes in 2022 grew by 76.8% to Rs. 534 billion (2.2% of GDP) mainly due to the surcharge tax, which accounted for more than one fifth of total income tax mobilised during the year. Consequently, the share of direct tax revenue in the total tax revenue collection improved to 30.5% in 2022 over 23.3% recorded in 2021.

Revenue from Advance Personal Income Tax (APIT) and Withholding Tax (WHT) also increased in 2022 by Rs. 10.2 billion and Rs. 7.4 billion, respectively, to Rs. 25.5 billion and Rs. 19.8 billion, respectively, compared to 2021, due to improved tax administration in 2022, compared to 2021 when revenue collection activities were hampered by the pandemic.

Revenue from VAT increased by 50.2%, mainly reflecting the impact of the rise in price levels and upward revisions made to the VAT rate from June and September 2022. Since revisions to the general VAT rate were effective during the second half of 2022, revenue from VAT, as a percentage of GDP, recorded only a marginal increase from 1.8% of GDP in 2021 to 1.9% of GDP in 2022. Revenue from VAT on domestic services increased to Rs. 291.6 billion in 2022, compared to Rs. 185.5 billion in 2021, while revenue from VAT on import related activities increased to Rs. 171.5 billion in 2022 in comparison to Rs. 122.8 billion in the previous year.

Reflecting the nominal growth in VAT revenue, the share of revenue from VAT on total revenue and total tax revenue increased to 23.4% and 26.4%, respectively, compared to 21.2% and 23.7%, respectively, recorded in 2021.

Revenue from excise duties grew by 11.6% in 2022, to Rs. 342.5 billion in nominal terms, over the preceding year, benefitting from the increased collection of excise duties on liquor and cigarettes. Revenue from excise duties on liquor increased by 19.2% to Rs. 165.2 billion in 2022, while revenue from excise duty on cigarettes and tobacco increased by 17.6% to Rs. 104.2 billion, which could be mainly attributable to the upward revisions made to the excise duty structure on liquor and cigarettes effective from November 2021. In addition to the increase in excise duties, growth in cigarette sales contributed to higher revenue collection from cigarettes.

Revenue from excise duty, as a percentage of GDP, declined from 1.7% in 2021 to 1.4% in 2022, reflecting the necessity of implementing the inflation indexed excise duty structure for liquor and cigarettes, according to the Central Bank.

Revenue collection from PAL increased to Rs. 180.6 billion in 2022, compared to Rs. 154.1 billion in 2021. Increase in international prices on several items, such as petroleum products, cement clinker, steel, raw materials, and other consumable commodities, along with the impact of the depreciation of the Sri Lanka rupee, contributed to the increased collection from PAL.

Non tax revenue collection increased by 43.4%, mainly due to the improved revenue collection from fees and charges and profits transferred by the Central Bank based on the financial statements of 2021. Accordingly, revenue from fees and charges increased by Rs. 47.4 billion to Rs. 90.1 billion in 2022 mainly due to the revision of fees and charges of postal and railway departments. The profits transferred by the Central Bank increased to Rs. 30 billion in 2022 in comparison to Rs. 15.0 billion recorded in 2021. In addition, social security contributions also increased by 8.1% to Rs. 37.4 billion in 2022 over 2021.

Key developments in Govt. Expenditure

Government recurrent expenditure grew significantly in 2022, mainly due to the increased domestic interest payments owing to large borrowing requirements and elevated interest rates, along with the rise in expenditure on salaries and wages, and subsidies and transfers.

Expenditure on interest payments, which accounted for 44.5% of total recurrent expenditure, grew by 49.3% to Rs. 1.5 trillion while domestic interest payments rose by 80.8% to Rs. 1.4 trillion in 2022.

Expenditure on interest payments accounted for 79.1% of government revenue in 2022. Expenditure on goods and services increased by 12.3% in 2022, compared to 2021.

Salaries and wages, which accounted for 27.2% of the total recurrent expenditure in 2022, increased by 13.1% to Rs. 956 billion owing to the additional monthly allowance paid to public sector workers based on the relief package introduced in January 2022 as well as the impact of general annual increments.

Similarly, expenditure on other goods and services grew by 8.2% in 2022, in comparison to the preceding year. Expenditure on subsidies and transfers were up 19% to Rs. 719.4 billion mainly due to the additional monthly allowance paid to pensioners and Samurdhi recipients (Rs. 121 billion up from Rs. 55.4 billion in 2021) increased expenses on fertiliser subsidy. Capital expenditure and net lending rose by 28.5% to Rs. 1 trillion mainly due to higher lending to SOEs.

According to the Central Bank in view of the widening budget deficit and limited budgetary financing avenues for the Government, several expenditure rationalisation measures were introduced in March 2022. The Ministry of Finance, Economic Stabilisation and National Policies (MOF) issued a circular instructing government institutions to suspend non-essential, non-urgent capital expenditure, restrict recurrent expenditure on overtime payments, loans granted to public sector employees, and stationery and printing costs, etc., while freezing new recruitments to the public sector. A similar circular was issued in August 2022, instructing to curtail expenditure of commercial corporations, statutory boards, and government owned companies. In consideration of the energy crisis faced by the country and increasing government expenditure, in March 2022, the Ministry of Public Services, Provincial Councils, and Local Government issued a circular instructing to reduce expenditure on fuel and electricity of these institutions.

The Cabinet of Ministers granted approval to reduce 6% of the approved recurrent expenditure estimates of all government institutions for 2023. Finance Ministry issued a circular to all ministries, departments, provincial councils, district secretariats, state corporations, statutory boards, and government owned companies to cut down 6% of their recurrent expenditure, other than essential expenses, such as salaries, retirement benefits, medicines, rents and local taxes, interest payments, and mandatory welfare benefit payments.

Source: DailyFT

By: Staff Writer

Colombo (LNW): Japan has agreed to promote coordinated debt restructuring program for Sri Lanka welcoming the government’s to begin discussions with the bilateral creditors on debt restructuring of US$ 7.1 billion out of the total $25.9 billion owed to external creditors.
Sri Lanka is now holding debt restructuring talks with Paris Club members together with India, while discussing with China separately.

Three baseline restructuring scenarios” with six-year maturity extension for all of them and nominal haircuts ranging from 15 per cent to 30 per cent, with higher coupons corresponding to lower haircuts have already been proposed reliable official sources said.

Each of the three baseline scenarios also implies roughly equal net present value relief of 23-28 per cent at the IMF’s preferred 5 per cent discount rate.

Sri Lanka indebted $7.1 billion to bilateral creditors, according to official government data, with $3 billion owed to China, $2.4 billion to the Paris Club and $1.6 billion to India.

The government will present a comprehensive plan for treating foreign as well as local debt to creditors this month (middle of May) postponing the earlier date late on Tuesday (April 25),a senior finance ministry official involved in IMF negotiations said.

“Sri Lanka’s total debt is $ 83.6 billion. Foreign debt amounts to $ 41.5 billion. Domestic debt amounts to $ 42 billion.

It is expected the restructuring negotiations delay and extend till December against the government deadline of completing it by September, he claimed.

Under the IMF staff baseline scenario, $17 billion in debt service reduction is required, including the arrears accumulated in 2022.

Finance Minister of Japan Shunichi Suzuki acknowledged the higher risks faced by low- and middle-income nations concerning debt vulnerabilities amid the COVID-19 pandemic and Russia’s invasion of Ukraine.

He welcomed the recent launch of a coordinated debt restructuring program for the bilateral creditors of crisis-hit Sri Lanka, with Japan, India and France announcing the start of the process in April. China is also a major creditor.

“It is essential to improve debt data transparency and accuracy to prevent future debt crises,” the Minister added.

The government will present a comprehensive plan for treating foreign as well as local debt to creditors next Month (middle of May) postponing the earlier date late on Tuesday (April 25),a senior finance ministry official involved in IMF negotiations said.

The delay in the releasing of the plan shows the difficulty the Sri Lanka authority face in balancing the demands of its bondholders, he said adding that this will be raising the risks associated with the IMF’s $3 billion Extended Fund Facility (EFF) program.

“Sri Lanka’s total debt is $ 83.6 billion. Foreign debt amounts to $ 41.5 billion. Domestic debt amounts to $ 42 billion.

It is expected the restructuring negotiations delay and extend till December against the government deadline of completing it by September, he claimed.

Under the IMF staff baseline scenario, $17 billion in debt service reduction is required, including the arrears accumulated in 2022.

Foreign creditors now demand to include domestic debt in the restructuring, which some Sri Lankan banks opposing but the government seeks to avoid talks that include pre-conditions.