By: Staff Writer

Colombo (LNW): Sri Lanka has missed the first quarter revenue target of Rs 782 billion due to inefficient tax collection procedure of the Inland Revenue Department (IRD) Senior government minister claimed.

State Minister of Finance Ranjith Siyamablapitiya noted that the IRD has actually collected Rs 316 IN 1Q 2023 making shock waves for IMF representatives who visited the island nation recently.

According to finance ministry estimate, the expected revenue in 2023 is Rs. 3415 billion its major portion of tax revenue is Rs. 3130 .

This clearly indicates that the government is receiving only Rs 500 billion from all other means including the treasury contributions from SOEs to the consolidated fund.

The million dollar question is as to how the government is to bridge the massive deficit of 60 percent of the country’s revenue in 1Q 2023 as it has collected only 40 percent of the targeted revenue.

State Minister of Finance Ranjith Siyambalapitiya told Parliament that despite projections the Government would fall short of its excise revenue target by 30% there will be revision to the tax on alcohol products.

Siyambalapitiya told the house that following the price increase in January with new excise tax by over 20%, excise revenue from alcohol sales had dropped 7.4%. March, which is usually a high volume month, had seen a dip in production this year of almost 40%.

The State Minister said it is anticipated that some products can maintain volumes despite price increases, and alcohol had been listed as one of them, but the recent events had proven this theory wrong.

He also noted that whilst it is good to reduce alcohol consumption, it has been observed that consumers have turned to cheaper illegal alternatives, and therefore a discussion has begun on finding ways to tackle this problem, without reducing prices.

He noted that in the current situation the Government has lost revenue, but consumers continue to drink unregulated products that can pose further burdens to the economy.

The Minister said prices of all goods have increased according to inflation and the Government has no intention to provide any exceptions to the alcohol industry.

By: Staff Writer

Colombo (LNW): Japan has extended every assistance to Sri Lanka playing a critical role as an investment partner in Sri Lanka’s fledgling electronics and electrical components sector, eminent economist and SJB mp Dr. Harsha De Silva said citing Professor Premachandra Athukorale, he noted that it is Japanese investments that are driving the fledgling mid-sized electrical and electronics component industry,

He disclosed that t export volumes had reached $500 million according government statistics but could be closer to US $1 billion if categorized more appropriately.

Shifting focus to the strained relations between Sri Lanka and Japan, MP Harsha pointed out specific instances that have contributed to this situation.

He criticised the government for unilaterally canceling agreements without consulting the Japanese, particularly the $2.2 billion Light Rail Transit (LRT) project.

The government at the time justified its decision by deeming the project costly and unsuitable for metro Colombo. However, he questioned the government’s sudden change in stance, highlighting that the minister responsible for urban development now acknowledges the LRT as the best transport solution for Colombo.

This contradiction raises concerns about whether political support or personal interests influenced the government’s decisions.

He started by acknowledging Japan’s significant contributions during the crisis and highlighted several key areas of support.

Among them, he mentioned that Japan supplied $46 million worth of diesel to hospitals, ensuring uninterrupted healthcare services.

Additionally, Japan provided $6.5 million of food aid, supplementing the previous $30 million already given.

MP Harsha De Silva commended Japan’s efforts in assisting women and other micro-entrepreneurs who faced hardships by extending $1.5 million in aid, as well as providing $4.5 million of free fertilizer to aid 250,000 farmers.

Furthermore, he acknowledged Japan’s provision of $4 million through the UNDP for agriculture.

Building on the President’s comments at the Nikkei Conference in Tokyo, Japan, regarding trade integration and debt sustainability, MP Harsha emphasized the need for Parliament to move beyond petty politics and gazettes.

He called for all Parliament members to unite in determining the future of the country, raising three key points. Firstly,

he asserted that trade integration and debt sustainability are strongly correlated, highlighting the importance of greater trade integration for stronger debt sustainability.

Secondly, MP Harsha De Silva dispelled the myth that severe import restrictions and export encouragement are the solutions, stating that Sri Lanka is currently one of the most closed countries in the region.

He stressed the failure that would result from closing borders and implementing high tariffs and duties.

Finally, MP Harsha emphasized the significance of trade integration in attracting foreign direct investment (FDI), advocating for Sri Lanka to become a partner in producer-driven global production networks by vertically integrating into complex production with investments from established brands.

By: Staff Writer

Colombo (LNW): Leading blue chip John Keells Holdings (JKH) has expressed optimism on Sri Lanka’s recovery if the country successfully pursues its first ever fundamental framework of economic policies.

JKH Chairperson Krishan Balendra in his review in the company’s FY23 Annual Report commended the efforts of the Government and policy-makers for successfully navigating the economic stabilisation measures over the last few quarters and in reaching some key milestones including securing the EFF with the IMF, together with the implementation of difficult policy actions.

“While many challenges remain, the country has, possibly for the first time ever, put in place the fundamental framework of economic policies that will enable us to emerge from this crisis stronger,” Balendra said adding, “We are optimistic that Sri Lanka is on a path to recovery, particularly, if these measures continue to be in place and sustained over a period of time.”

It was emphasised that whilst these measures, as expected, would curtail consumer spend and activity in the short to medium-term, the stability and confidence in achieving fiscal consolidation will lead to a more sustained recovery.

Balendra said the new legislative enactments regarding fiscal responsibility are much needed to ensure policy consistency and macroeconomic stability as it provides the required checks and balances.

“JKH urges the authorities to expedite the implementation of much needed public sector reforms, including privatisation, as done by countries when faced with similar challenges in the past, to restore and sustain fiscal discipline.

These reforms will also aid the Government in raising revenue through investment while ensuring better collaboration, technology and knowledge transfer in key industries,” JKH Chief said.

He noted that through the volatility and uncertainty of the previous years, JKH maintained its belief that challenges can also be catalysts for positive transformation.

He expressed confidence that these investments come to fruition, and JKH Group will see a “significant upward ‘re-rating’ of its performance from the already strong platform we have built over the years.”

The recurring Group profit before tax (PBT) decreased by 30% to Rs. 17.14 billion while the recurring profit attributable to equity holders of the parent decreased by 35% to Rs. 13.33 billion for the financial year ended 31 March 2023.

JKH Chief also reiterated the need for tourism authorities to expedite the launch of Sri Lanka’s much awaited global marketing campaign, especially in key source markets, particularly to address the lack of awareness and negative perception regarding the ground situation in the country.

He noted that Sri Lanka recorded over 770,000 tourist arrivals for 2022/23, with March 2023 recording the highest number of arrivals since the peak of the economic crisis.

The Group is confident that the current recovery trend in arrivals will continue, particularly given the opening of the Chinese borders for international travel after a period of three years and the increase in frequencies of flights by a few major airlines,” Balendra said.

By: Staff Writer

Colombo (LNW): India has done more for Sri Lanka than the International Monetary Fund (IMF), Union Minister for External Affairs Dr S Jaishankar said.

The Modi Government, he underlined, is working on developing an “extended neighbourhood” that involves islands in the Indian Ocean, Gulf countries and nations in South-East Asia.

India has extended a $1bn credit line for Sri Lanka by one year, a Sri Lankan official says, giving the crisis-hit island nation a backup infusion of dollars for essential imports.

The credit line, part of about $4bn in emergency assistance extended by India during the peak of Sri Lanka’s financial crisis early last year, was scheduled to end in March. “

After the negotiations, the credit line was extended until March 2024, Sri Lanka’s Deputy Treasury Secretary Priyantha Rathnayake disclosed adiing that there is about $350m left of the credit line that can be utilized as needed.

Sri Lanka owes $7.1bn to bilateral creditors, government data show, with $3bn owed to China, followed by $2.4bn to the Paris Club and $1.6bn to India.

The government also needs to renegotiate more than $12bn of debt in eurobonds with overseas private creditors, and $2.7bn on other commercial loans.

What we have done for Sri Lanka is bigger than what the IMF has done for Sri Lanka. If any of you have visited Sri Lanka recently, then you will note the popular perception that has accrued from this action,” he added.

“What we are also trying to do today is for a bigger, influential and ambitious India. We are trying to expand what should be our neighbourhood. We look at what this extended neighbourhood should be.

It could be islands in the Indian Ocean, nations in South-East Asia and Central Asia, or Gulf countries. The relationship with the UAE and Saudi Arabia has undergone an enormous transformation.

From what was a traditionally much more constricted view of our neighbourhood, we have undertaken something much more ambitious,” said Jaishankar during a talk on “Modi’s India: A Rising Power” at Anant National University in the city.

Pointing out how the world has become more uncertain, volatile and turbulent, Jaishankar underlined it was time to use the “complex global landscape” for the betterment and growth of India.

The pandemic and the Ukraine-Russia conflict has helped to build “resilient and reliable supply chains”, “domestic capacities” and “trusted relationships,” he highlighted.

“The linkages and perception today of India in the neighbourhood has changed. Nothing illustrated that more dramatically than what happened to Sri Lanka.

Last year, when they went through a very deep economic crisis, we stepped forward in a way we ourselves have never done before.

If any of you have visited Sri Lanka recently, then you will note the popular perception that has accrued from this action,” he added.