The International Monetary Fund (IMF) has defended the income tax hike and other tax reforms as essential for fiscal stability critical for Sri Lanka while declaring that it recognizes the economic hardship of people.
According to statistics presented in the 2023 budget speech, the government expects to increase revenue from taxes to Rs.3.1 trillion (US$8.5 billion) from Rs 1.3 trillion 2021.
The document shows that income tax would go up three times from Rs.302 billion ($824 million) to Rs.912 billion rupees ($2.5 billion)
The value-added tax (VAT) applied on almost all goods and services was raised from 8.0 percent to 12 percent with immediate effect, while corporate taxes were also increased from 24 to 30 percent.
Sri Lanka’s recent tax rises are in line with international comparisons and needed to help creditors regain confidence, the International Monetary Fund said on Thursday, backing the crisis-hit country’s effort to lock down a $2.9 billion bailout.
An IMF statement said the hikes, which included an up to 36% rise in income taxes, were essential to tackle revenue collection that has been low by global standards.
External financing would not bridge the gap needed to fund essential expenditure, the statement added.
Efforts to increase tax revenues should be pursued in a growth-friendly manner while protecting the poor and most vulnerable,” the IMF said. “It is however also important that those who can most afford it make commensurate contributions to the financing of the necessary government expenditures.”
“We understand the hardship people of Sri Lanka are experiencing at this time. Increases in the cost of living, loss of employment and livelihood, and falling real incomes have hit large parts of the population, and particularly the poor and vulnerable who have no buffers to withstand these hardships,” said IMF’s Senior Mission Chief for Sri Lanka Peter Breuer and Sri Lanka Mission Chief Masahiro Nozaki.
Responding to recent media questions around income tax hikes, the IMF officials pointed out that the current economic crisis has a number of origins, including the Government’s inability to meet Government spending needs through its revenue collections.
“Sri Lanka is among the countries to collect the least amount of fiscal revenue in the world, with tax revenue to GDP ratio at only 7.3% in 2021. External creditors are not willing to provide financing to fill this gap,” IMF officials added.
In that context they emphasized that: “Tax reforms are needed to correct this imbalance and only with appropriate tax receipts will the Government be able to fund essential expenditures, and avoid further slashing of critically important outlays. These reforms will also help regain the confidence of creditors.”
IMF officials said efforts to increase tax revenues should be pursued in a growth friendly manner while protecting the poor and most vulnerable.
“It is however also important that those who can most afford it, make commensurate contributions to the financing of the necessary Government expenditures,” they added.
The tax package the authorities have introduced, including the new tax rate schedule for the personal income tax, IMF officials said “helps to meet these objectives. The tax rates proposed under the authorities’ program are also in line with international comparison.”
IMF claims Sri Lanka tax hike to help creditors regain confidence
Sri Lanka Original Narrative Summary: 03/03
- President Ranil Wickremesinghe announces that a foundation is presently being established to advance Sri Lanka’s economy to a global level over the next five years by implementing green economic policies.
- SL’s foreign reserves estimated US$ 1.7 billion as of September, 2022 increase by 23.5 per cent to US$ 2.1 billion as of February, 2023: Headline inflation previously recorded 94.9 per cent in September, 2022 drops to 60.1 per cent in January, 2023: Tourist arrivals surge by 261 per cent, rising to 107,639 in February, 2023 from 29,802 in September, 2022: State Finance Minister Ranjith Siyambalapitiya says the Rupee has strengthened due the ‘political stability’ and a ‘peaceful’ atmosphere established by the government: Despite the purported stability, the government is vehemently being criticised for the repressive measures it has taken against the Opposition and protesters, who are demanding the assurance of democracy.
- Chief Opposition Whip and SJB MP Lakshman Kiriella says the popularity of the government has dropped to 08 per cent as per the latest survey, and the government, therefore, is afraid of holding elections.
- The President’s Media Division says the government will be digitising investment information to facilitate easy access for investors and efficient use of state-owned land to boost agriculture, in a desperate bid to direct the cash strapped country towards the reawakening of investment promotion and development.
- Parliament to hold a two-day debate on the proposed postponement of the LG Polls as agreed during a special Party Leaders’ meeting hosted by Speaker Mahinda Yapa Abeywardena: The debate is scheduled for March 09 – 10.
- Reports storm that media giant Dilith Jayaweera is entering public politics; claim he has secured a registered political party previously owned by Hemakumara Nanayakkara for his future political journey: Jayaweera previously seen establishing a movement namely “Aramuna” and holding awareness campaigns on how to face the economic crisis.
- The Election Commission scheduled to meet today to discuss the problematic situation regarding the date of the LG Polls: Chief Nimal Punchihewa says its members M.M. Mohammed, S.B. Diyaratne and K.P.P. Pathirana will participate in the meeting.
- Child rights charity “Save the Children” says Sri Lanka’s economic meltdown has spiralled into a full-blown hunger crisis, with half of the families forced to reduce the amount they feed their children; warns the Sri Lankan government and the international community must act now to prevent the country’s children from “becoming a lost generation.”
- Media reports ‘heated exchange’ of words between the lawyers appearing for the plaintiff and the respondent in a case against State Minister Diana Gamage: A complaint urging a probe into her passport in question called in before the Colombo Magistrate Court: Police accused of ‘challenging’ the Magistrate’s request to proceed with an arrest by citing ‘lack of evidence’: Case adjourned by Colombo Chief Magistrate Prasanna Alwis.
- Expolanka Holdings says its latest acquisition of the Trans American Customhouse Brokers LLC and its related companies will help further consolidate its position in the key North American market: EFL Global LLC, a leading global supply chain and logistics solutions company owned by Expolanka, acquired 100 per cent equity interest in Trans American Customhouse Brokers LLC for a purchase consideration of US$ 42.5 million on a cash-free, debt-free basis.
Election Commission meets to discuss the problematic situation in LG elections
The Election Commission is scheduled to meet today (03) to discuss the problematic situation regarding the date of the local government election.
The chairman of that commission, Nimal Punchihewa, mentioned that its members, M.M. Mohammed, S.B. Divaratne and K.P.P. Pathirana will participate in this meeting.
Earlier, the local government election was scheduled to be held on March 09, but the election commission had announced that it could not be held on that day due to lack of financial allocation.
Data census to identify eligibility for welfare benefits ends on March 31
Applicants advised to provide accurate information to the concerned authorities immediately
The on-going information survey aimed at identifying eligible individuals for the welfare benefits payment program, as instructed by President Ranil Wickremesinghe, will conclude on March 31, according to the Welfare Benefits Board.
The Welfare Benefits Board cautions that failing to provide data before the deadline, could result in the loss of benefits. They urge all applicants to ensure the accuracy and timeliness of their data by promptly providing it to the field officers conducting the Information Survey for the Welfare Benefit Payment Program.
The implementation of this program will align with the amended Welfare Benefit Payment Orders No. 1 of 2022, as per the provisions of the Welfare Benefits Act No. 24 of 2002. The Cabinet of Ministers approved this amendment, which was published in the Special Gazette No. 2302/23 dated 20 October 2022, as per the Special Gazette No. 2310/30 dated 15 December 2022.
The application process to identify eligible candidates for welfare benefit payments has concluded, with a total of 3,728,139 applications received. However, as of yesterday (01), only 102,143 applicants have provided accurate data.
To collect data for the information survey of the welfare benefit payment program and identify eligible beneficiaries, a total of 6,728 officers have been deployed across all divisional secretariats in the island. This includes 3,190 development officers, 494 economic development officers, 205 village officers, 1,127 other officers, and 1,712 temporary recruits.
To ensure their eligibility for the welfare benefit payment program, applicants must provide accurate information to the relevant officials and verify their identity with a National Identity Card, Electoral Register registration number, or a letter issued by the Divisional Secretary.
Additionally, clinic and medical records of kidney patients and disabled persons, as well as water and electricity bills, may also be submitted as supporting documents for the welfare benefit payment program application.
Once the data acquisition process is complete, carried out under the slogan “Let’s be truthful – let’s give benefits to deserving people”, applicants must sign a statement confirming the accuracy of their data. A QR code will be provided to every household, which can be used to monitor the summary of the data provided.
President’s Media Division (PMD)
Ambassador-designate of Sri Lanka to France assumes duties
The newly appointed Ambassador-designate of Sri Lanka to the Republic of France and Permanent Delegate of Sri Lanka to UNESCO Manisha Gunasekera assumed duties at the Embassy of Sri Lanka in Paris on Monday, 27 February 2023.
Her assumption of duties was marked by a simple ceremony organised by the staff of the Sri Lanka Embassy.
In her address to the staff of the Embassy, the Ambassador-designate referred to the longstanding vibrant relations between Sri Lanka and France; the celebration of the 75th anniversary of diplomatic relations between the two countries this year; the need to further elevate trade, investment and tourism ties as well as cultural cooperation; and expanding bilateral cooperation in the maritime domain. She also emphasised the importance of maintaining an efficient and effective consular service by the Embassy towards Sri Lankan nationals and the community of Sri Lankan heritage residing in France.
The Chief of State Protocol and Diplomatic Events of the French Ministry for Europe and Foreign Affairs Ambassador Philippe Franc met Ambassador-designate Gunasekera at the Embassy on Monday 27 February. The Chief of Protocol welcomed the Ambassador-designate and assured her of his fullest cooperation as well as that of the French Foreign Ministry during her tenure in France. He extended his best wishes to the new Ambassador-designate. Ambassador-designate Gunasekera presented the open copy of the Letter of Credence of her appointment to the Chief of State Protocol, and deeply appreciated the warm reception extended to her, as well as the sentiments expressed.
Ambassador-designate Gunasekera has served in various portfolios in the Sri Lanka Foreign Service in her career spanning 27 years. She most recently served as the Additional Secretary/ Bilateral Affairs (West) of the Ministry of Foreign Affairs of Sri Lanka. She has previously served as Sri Lanka’s High Commissioner to the United Kingdom and as Sri Lanka’s Ambassador to the Republic of Korea.
Ambassador-designate Gunasekera has a BA (Hons.) in English from the University of Delhi, an MA in International Political Economy and Development from the International Institute of Social Studies in the Hague, an MA in Women’s Studies from the University of Colombo, and a Postgraduate Diploma in European Studies from Sciences Po, Paris. She is a past pupil of Musaeus College, Colombo.
Embassy of Sri Lanka
France
01 March 2023
SL and the UAE hold First Session of Bilateral Joint Committee for Consular Affairs in Colombo
The First Session of the Joint Committee for Consular Affairs (JCCA) between Sri Lanka and the United Arab Emirates was held in Colombo at the Ministry of Foreign Affairs, on 22 February 2023 with the participation of official delegations, representing Sri Lanka and the UAE. The meeting was conducted, as per the provisions of the Memorandum of Understating (MOU) signed between Sri Lanka and the UAE in November 2017.
The meeting was co-chaired by Additional Secretary of the Ministry of Foreign Affairs, in charge of Consular Affairs and Political Affairs for Middle East & Africa U L Mohammed Jauhar, and Assistant Undersecretary for Consular Affairs of the Ministry of Foreign Affairs and International Cooperation of the UAE Faisal Eissa Lutfi Ali. The respective delegations comprised officials representing the Ministries of Foreign Affairs and other vital line ministries and agencies.
The meeting focused on a wide range of mutually important consular related areas, including human smuggling & human trafficking, illegal migration, deportation and repatriation of nationals in custody of both countries and expediting compensation payment to eligible persons. Both delegations agreed to enhance cooperation in combating human trafficking, including by sharing information.
The UAE delegation also made a comprehensive presentation on the existing labour laws and regulations, with an emphasis on the rights of employees, the procedure to be followed in notifying authorities when labour contracts are violated, and providing relief to affected persons. It was also decided to include the updated UAE labour regulations in the SLBFE training modules, with a view to educating prospective migrant workers, in the UAE.
The heads of delegation emphasized the importance of continuing the interactions on mutually agreed matters at the JCCA sessions as per the provisions of the MoU and assured the implementation of the decisions arrived at the JCCA.
Assistant Undersecretary Lutfi Ali also paid a courtesy call on the Acting. Foreign Secretary, Yasoja Gunasekara. During the meeting, the UAE delegation expressed their utmost satisfaction about the successful completion of the First Session and also discussed in detail a variety of consular matters and practices, and other relevant topics. The UAE delegation visited the Foreign Ministry’s Consular Affairs Division in order to witness its attestation process and was briefed on the activities of the division, including the electronic document attestation system.
Ministry of Foreign Affairs
Colombo
02 March 2023
President emphasises the need for an urgent transition to a green economy
Colombo (LNW): President Ranil Wickremesinghe has announced that a foundation is presently being established to advance Sri Lanka’s economy to a global level over the next five years by implementing green economic policies.
The President made this statement while attending the ceremony held today (02) for the opening of Volta Auto Tec Engineering Private Limited, Minneriya.
As a solution to the current fuel crisis in the country, when there is a need for electric motorcycles and three wheelers, Volta Auto Tec Engineering Private Limited has facilitated the purchase of assembled tractors, electric motorcycles and three-wheelers from today onwards.
At present, Volta Auto Tec Engineering Private Limited has established a collaborative production partnership with India, and has reported receiving orders from countries such as Vietnam.
During his visit to the factory, the President inquired about the assembly process of bicycles, electric motorcycles, and tricycles from the officials.
A representative from a local farmers’ organisation also presented a souvenir to the President marking this occasion.
Further speaking President Ranil Wickremesinghe said:
“I am delighted to have come to see the talents of the Volta Auto Tec Engineering Private Limited. The government is looking into ways of supporting this initiative. We should appreciate this step taken to create a green economy. All should work to shift the country’s economy to a green economy by implementing such projects. Now, the countries of the world are moving towards a green economy. As Sri Lanka, we should also embark on that journey.
Sri Lanka has the potential to achieve many advantages by moving towards a green economy in the next five years. In this regard, the country needs such investors and businessmen who stand up on their own. Therefore, I congratulate Mr. Jagath Makavita on this initiative.”
Minister of Sports Roshan Ranasinghe, Minister of Power and Energy Kanchana Wijesekera, State Ministers Dilum Amunugama, Siripala Gamlath, Premitha Bandara Tennakoon, Presidential Senior Adviser on National Security and Chief of Presidential Staff Sagala Ratnayake, former Minister Ravi Karunanayake, former Member of Parliament Chandrasiri Sooriyaarachchi, Chairman of Volta Auto Tec Engineering Private Limited Jagath Makavita and others were present on this occasion.
Half of Sri Lanka families reducing children food intake: Charity
The government and the global community must act to prevent the country’s children from ‘becoming a lost generation’, warns Save the Children.
By: Saroj Pathirana | Al Jazeera
Colombo, Sri Lanka – Sri Lanka’s economic meltdown has spiralled into a full-blown hunger crisis, with half of the families in the island nation forced to reduce the amount they feed their children, according to a child rights charity.
The Sri Lankan government and the international community must act now to prevent the country’s children from “becoming a lost generation”, Save the Children warned in a report published on Thursday.
Since late 2021, the South Asian island nation is in the grip of its worst ever economic crisis, fuelled by a lack of foreign reserves and mounting foreign government debt.
The country of 22 million people has sought help from the International Monetary Fund (IMF) after defaulting on its $46bn debt last April.
“Since the Sri Lankan government defaulted on its debt nearly a year ago, soaring inflation and food, medicine, and fuel shortages as well as a lack of stable employment have left families unable to cope,” the report said.
While half of Sri Lankan households are cutting their children’s food intake, according to the charity, 27 percent of more than 2,300 households it surveyed reported adults skipping meals to feed their children.
Nine out of 10 households said they cannot guarantee nutritious food for their children, it said.
The Save the Children report came a day after thousands of workers went on a strike in defiance of a government directive declaring several services as essential to stop protests over the IMF bailout plan.
‘Heartbreaking stories’
Shashikala Madhuvanthi Silva, a 40-year-old mother of four in Kalutara district, 80km (50 miles) from the commercial capital of Colombo, told Al Jazeera none of her children is getting a proper meal since the crisis began.
“My husband is a tuk-tuk driver but he isn’t getting much income now as more and more people are choosing public transport due to increased cost of living,” she said.
As a result, she is forced to feed her children less nutritious food. “Not that I don’t feed them but I can’t any longer afford egg, meat or fish every day.”
Silva recently started working at a nearby garment factory – her first ever job. “I get 900 rupees [$2.50] for a nine-hour shift,” she said. “What can you do with 900 rupees a day? But I have no choice.”
Renuka (not her real name) is a teacher in the Western Province. Speaking to Al Jazeera on condition of anonymity, she described the situation at her school. In Sri Lanka, government workers including teachers can often be sacked for speaking to the media.
“It was a Monday. When I was about to have my lunch, I spotted a child looking at me in a sad way. He was almost in tears. When I asked what the matter was, he told me that he, his mother and his younger sister have only had several cups of tea during the weekend,” she said.
The teacher said from that day onwards, she started bringing an extra lunch box for the boy.
“One day, he asked me whether he could take his lunch home. Instead of having his meal at school, the boy wanted to take it to his mother and sister.”
“This is about just one family,” said the teacher. “There are many more heartbreaking stories.”
‘Emergency situation’
Muditha Dharmapriya, a nutritionist in Colombo, told Al Jazeera he agreed with the findings of the Save the Children survey.
“I don’t have the statistics but it is true that so many people, maybe 50 percent of the households as the survey says, aren’t having enough nutrition,” he said.
“As per the Food Guide Pyramid, a child needs to have two-three servings of meat, fish, and poultry [MFP] per day. But many households in Sri Lanka can’t afford that,” he added.
And it is not only protein that children are not getting enough due to skyrocketing cost of living. A person needs six to 11 servings of carbohydrates, through which the body gets 1,500-2,000kcal a day. Since the economic crisis, Dharmapriya says, that intake has been reduced to nearly 900kcal.
“People can no longer eat rice as they used to. Instead of eating a nutritious diet, what happens now is that people eat something only to stop feeling hungry. They may be eating a reduced portion of rice and no MFP at all,” he said.
However, journalist and political analyst Kusal Perera said the findings of the charity’s survey were “too generalised”.
“I think the sample of just over 2,300 households from nine districts does not actually represent every segment of the society in terms of income and social status,” he told Al Jazeera.
Meanwhile, Save the Children has warned of “a very real danger of a full-blown hunger crisis” in Sri Lanka.
“This is an emergency situation that requires an emergency response,” said Julian Chellappah, the charity’s Sri Lanka director.
Source: Al Jazeera
The time has come for Parliament to call for a ceasefire for the sake of the nation: NMSJ
Considering the serious issues faced by the country and the people today, we have not yet reached a situation where we can see an end to them. Therefore, we do not underestimate the distress that has arisen among the people. There is still no sign of a concerted effort to find a lasting and permanent solution to these serious issues.If we think that there are simple or immediate solutions to this crisis, it is also nothing but a great delusion.
As the National Movement for Social Justice (NMSJ), we understand the depth of the crisis we are facing at present and the fact that there are no short or quick solutions to come out of it. We are also sensitive to the serious problems faced by the people and have understood the tragic conditions they have to experience in many aspects of their lives. Moreover, we are trying to provide the necessary guidance to the parties who have to work towards finding proper solutions to these problems.
There are some great challenges that we, as a country, are facing. Foreign exchange deficit is the most important challenge before us. We consider the most painful experience that has arisen due to this is the helplessness of the people due to the lack of essential medicines. In order to find solutions to these problems successfully, the governance structure of the country must be properly managed, and no one should forget the challenge of strengthening democracy and strengthening the rule of law as a basis for the resolution of these issues.
We are well aware that there are four elections of national importance that should have been held and should be held, especially during the period of 2022-2024. They are provincial councils (PC), local government (LG) elections and presidential elections and general elections. It should also be emphasised that we have so far failed to find answers to a number of issues that need to be resolved as a country. In order to make some basic decisions that need to be taken in relation to the PC elections that have not yet been held as scheduled and the LG elections that are scheduled to be held, a parliamentary select committee has been established in the year 2022 according to a proposal made by us, but it has not yet been able to make the necessary decisions until now. We are very worried about that. It must be said emphatically that many such responsibilities have been neglected by the Parliament.
Even under such a situation, we believe that we should find solutions through the Parliament itself to overcome these challenges. Accordingly, it is our sole belief that in the current situation, they will not be able to find any solution by boycotting the Parliament or by taking measures to disable the country. All challenges must be won democratically and peacefully. There, the primary responsibility is assigned to the public representatives representing the Parliament.
Also, it is the opinion of the majority of the society that the executive presidential system peculiar to our country, which has laid the foundation for the creation of many issues that we are facing today, must be abolished. For that, the responsibility of preparing the environment has been assigned to the Parliament. Moreover, the responsibility of dealing with the existing corruption in the country and recovering the huge amount of wealth that has been looted from the country is assigned to the people’s representatives. Drafts are currently being prepared in relation to several bills that may lead to the well-being of the country. We emphasise that these activities should be done without delay and with a strong foundation in a way that suits the modern world, and can achieve the desired goals.
Attending the event to open the new session of the Parliament, the President mentioned that the government expects to pass several important bills in the coming months. He mentioned a number of important bills including the Economic Stabilisation Act, the Foreign Exchange (Amendment) Act, the Excise (Amendment) Act, the Revenue Authority Act, the Public Property Management Act, the National Security Act, the Truth and Reconciliation Act, and the Narcotics Control Command Headquarters Act. Considering the current situation, it is very important to complete these tasks immediately.
If the aforementioned laws including the anti-bribery and corruption law as well as a new constitution, rules and regulations on new election systems and procedures can be passed by the Parliament in the coming months, the “system change” (social transformation) demanded by the aragalaya (people’s struggle) and civil society will naturally emerge.
As the NMSJ, we are in constant dialogue with many similar civil and professional level organisations that are not part of any power political system, as well as with religious leaders. We are focusing on the unfortunate situation that the country is facing as well as the measures to be taken as a country. Also, we have presented several preliminary reports about the political and economic reforms that must be introduced. By doing so, we hope to inherit a better country for our future generations.
Many lives and national resources have been destroyed due to this discord within and outside Parliament. We are deeply moved and shocked by the sudden death of Mr. Nimal Amarasiri, the candidate of the National People’s Power (NPP) led by the Janatha Vimukthi Peramuna (JVP), who died while participating in a protest held in Colombo recently. It is the national duty of the government, the opposition and the people in general to ensure that such incidents do not occur.
To achieve that goal that the entire nation aspires to, we must unite before anything else. We should act collectively at least for a specific short period of time. It should be considered as an absolute responsibility not to contribute to any activity that may have any effect on anarchy in the country. Accordingly, the country needs a short period or a ceasefire.
Karu Jayasuriya
Chairman
National Movement for Social Justice
1 March, 2023
Political stability and peaceful atmosphere contributed to Rupee strengthening: Finance State Minister
By: Isuru Parakrama
Colombo (LNW): The Sri Lankan Rupee has strengthened due to a number of key decisions taken by the government affecting the economy, said State Minister of Finance Ranjith Siyambalapitiaya.
Among the contributory factors are the political stability and a peaceful atmosphere established by the government led by President Ranil Wickremesinghe, the State Minister said, adding that Finance Ministry data reveal that Sri Lanka’s foreign reserves estimated to be US$ 1.7 billion as of September, 2022 have increased by 23.5 per cent to US$ 2.1 billion as of February, 2023.
Headline inflation previously recorded to be 94.9 per cent in September, 2022 has dropped to 60.1 per cent in January, 2023, and tourist arrivals have increased by 261 per cent, rising to 107,639 in February, 2023 from 29,802 in September, 2022, Siyambalapitiya cited data.
The Rupee exhibits appreciation amidst a number of growing crises contradictory to the Minister’s comments about ‘political stability’, in the backdrop where island-wide protests and strike actions are in operation in objection to the recent tax hike and electricity tariff revision implemented by the government in obedience to the International Monetary Fund’s (IMF) US$ 2.9 billion bailout. On the sidelines of the purported ‘economic stability’, the government of Sri Lanka is vehemently being criticised for the repressive measures it has taken against peaceful protesters, who are demanding the holding of the Local Government Election for the assurance of democracy.