Sri Lanka’s merchandise exports earnings fell 9.68 percent in January to February 2023 year-on-year as the island nation saw a drop in buying from its key export destinations which are facing a looming recession after the Russia-Ukraine war, Export Development Board sources revealed.

For the period of January to February 2023, merchandise exports decreased by 9.68 % to US$ 1,983.42 Million compared to the corresponding period of 2021.

Export earnings of Apparel and Textiles, Rubber-based products and Coconut based products decreased by 2.32%, 17.81% and 19.74% respectively during the period of January – February 2023 compared with the corresponding period of 2022.

However, earnings from Spices and Concentrates, Electronics & Electronic Components, Food & Beverages and Seafood increased by 27%, 13.72%, 17.22% and 5.57% respectively during the period of January – February 2023 compared with the corresponding period of 2022.

Apparel and Textile exports decreased by 10.18% to US$ 946.46 Mn during the period of January to February 2023 compared to the same period of 2022, export of Apparel down by 16.82% while export of Textiles expanded by 74.16% in January to February 2023.

Export earnings from Tea increased by 6.27% to US$ 204.13 Mn during the period of January to February 2023 compared with the corresponding period of 2022.

Exports of all the sub categories of tea sector except Bulk Tea and Tea Bags; Tea packets (14.74%), Instant Tea (42.78%) and Green Tea (21.82%) increased during the period of January to February 2023 compared with the same period of 2022.

Export earnings from Rubber & Rubber finished products decreased by 15.44 % to US$ 152.45 Mn in January – February 2022 compared with the same period of 2021 attributed to lower exports of Pneumatic and Retreated Rubber Tyres & Tubes (-5.22%) and export of Industrial and Surgical Gloves of Rubber (-35.92%).

For the period of January to February 2023, export earnings from Coconut and Coconut based products decreased by 24.58% to US$ 102.72 Mn from the same period last year.

Earnings from all the major categories of Coconut based products decreased in the period of January – February 2023 compared with the corresponding period of 2021 due to the poor performance in export of Liquid Coconut Milk, Coconut cream, Coconut Milk Powder, Cocopeat, Activated Carbon, Coconut Oil and Desiccated Coconut.

Meanwhile, earnings from export of Electrical and Electronic Components (EEC) increased by 10.19 % to US$ 81.29 Mn in the period of January to February 2023 compared to the corresponding period of 2022.

Earnings from export of Switches, Boards and Panels and Other Electrical & Electronic Products increased by 37.31%, and 19.03 % respectively during the period of January to February 2023 compared with the corresponding period of previous year.

Export earnings from Seafood decreased by 1.84% to US$ 140.71 Mn in the period of January to February 2023 compared to year 2022 due to the poor performance in all the sub categories; Frozen Fish (-7.5%) and Prawns (-44.03%).

Out of the top 15 export markets, Italy, Canada, UAE and Bangladesh recorded positive performance in February 2023.

During the period of January to February 2023, only UAE has recorded a positive performance compared to the corresponding period of previous year.

Exports to the United States of America, Sri Lanka’s single largest export destination, decreased by 20.94 % to US$ 231.06 Mn in February 2023 compared to February 2022.

In addition, exports to United States of America decreased by 17.31 % to US$ 485.83 Mn in the period of January to February 2023 compared to January to February 2022

Japan is continuing its volunteer support towards the country’s development efforts at Grass-root Level by extending Volunteer Dispatch Program.

Ms.MINAMI Yuka, Ms. MORI June and Ms. NIKI Hiroko, the new Japan Overseas Cooperation Volunteers (JOCV) arrived in Sri Lanka on the 16th of February 2023 under this new initiative.

This new batch of three JICA volunteers will be involved in the fields of environmental education (in Kegalle and Ratnapura) and physical education (in Kurunegala) attached to institutions coming under several ministries.

Since the inception of JICA’s Volunteer Dispatch Program in Sri Lanka in 1981, a total of 1,160 volunteers have worked in the country, and their contribution towards development activities at grass-root level has been greatly valued by the organizations that have received their services in a variety of technical fields.

The biggest strength of JICA’s volunteers is their practical approach to problem solving and the use of local languages (Sinhala and Tamil) which enables them to understand and speak to the hearts and minds of local people.

These volunteers use extremely creative means of communication which is essential for effective training/teaching, and are able to positively influence those who work with them due to their positive attitude, strong sense of discipline and teamwork.

These volunteers not only transfer technical skills, but also share knowledge on cultural aspects, and most importantly, build strong and long-lasting friendships with local people that outlast their stay in Sri Lanka.

The new volunteers were introduced to their host organizations at an assigning ceremony, which was held at the Department of External Resources (ERD), on the 17th of March 2023.

The occasion was graced by the officials of Department of External Resources, volunteer host organizations and JICA Sri Lanka Office.

Rohan Chrishantha, Additional Director General (Debt Management) at Department of External Resources under the Ministry of Finance, paid attribute to the Japanese government and people for supporting Sri Lanka during the current economic difficulties

Moreover, he said, “he was really happy that three Japanese voluteers introduced themeselves to the audience very clearly in Sinhala Language after a very short period of study.

He expressed the belief that all of them will speak Sinhala very well when they finish their service in Sri Lanka during their 2-year assignment in the country.

After a hiatus of more than 2 years government restarted its volunteer activities in the month of August 2021, and this will be the dispatch of the 7th batch since then.

Therefore, the finance ministry is proud of new volunteers continuously being recruited to the country and also wish that new volunteers will carry out activities to the best of their ability, he claimed.

The government is exploring the possibility of amending the existing tax mechanism and it will be negotiated with the International Monetary Fund (IMF) in the first review of $ 2.9 billion EFF program in June this year.

Thousands of Public sector workers have demanded the government roll back high taxes imposed as a precondition to unlock the US $2.9 bn IMF loan.

The Government and the IMF will review the programme every six months. The first review will take place in June.

The government has already focused attention on amending the existing tax mechanism and the Treasury is already in the process of preparing amended proposals, President Ranil Wickremasinghe disclosed in parliament recently.

Further, intellectuals and economic experts have already submitted their views in this regard, which we hope to discuss, and reach an agreement,” the President said in his special address in Parliament on the Extended Fund Facility which the IMF Executive Board approved on Monday.

“We are discussing with the IMF to include these tax reforms in our plans at the review in June. In addition, we are discussing the other policy reforms which we think are necessary at present,” the President added.

“Some people try to portray that these issues can be solved through confrontations.

However, these problems have to be solved through caution, care and wisdom,” said President Ranil Wickremesinghe in an apparent response to continuous protests in the country by trade unions against the new tax regime which they say is unbearable.

On Monday IMF Senior Mission Chief for Sri Lanka Richard Breuer said at 8.6% of GDP, Sri Lanka is amongst the countries that collects the least amount of fiscal revenue in the world.

The President also told Parliament that the IMF-approved plan should be implemented and completed in four years.

“However, depending on our strength and determination, we should be able to finish it in three to three and a half years. Let’s give it a try. Let us put in the effort,” the President told the House.

Sri Lankan President Ranil Wickremesinghe said that if the country continues according to the existing plan, Sri Lanka can rise out of bankruptcy shortly.

He added that the government is committed to securing the financial system that was on the verge of collapse, noting that the government expenditure was controlled, while measures were taken to increase tax revenue.

Tax revenues decreased due to decisions taken in the past. As of 31st December 2019, 1.6 million businesses, companies and individuals paid taxes.

However, by December 2021, the number of taxpayers decreased to five hundred thousand. Government tax revenues fell to an all-time low.

Realizing the destruction this caused to the economy of the country, many institutions and organizations requested to revert to the tax system which existed in 2019,” he added.

“However, it is the same people who requested such tax policies, who are criticizing the present tax regime.

The President said that if PAYE tax is abolished, the country will lose 100 billion rupees, and if the tax limit is raised to two hundred thousand rupees, the economy will lose 63 billion rupees.

“The total amount that will be lost is 163 billion rupees. We are presently not in a position to lose this income,”he noted

However the Finance Ministry top officials are now considering other tax revenue options without burdening the middle class and the poor while focusing attention on alternate revenue enhancing proposals.

These proposals have been put forward by economic and financial experts and employees associations without heeding to the demands of politically motivated trade union leaders.