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Sri Lanka initiates action plan to ensure Green Economy by 2050

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Sri Lanka initiates action plan to ensure Green Economy by 2050

Colombo (LNW): Sri Lanka has the potential to establish the green economy, specially by way of renewable energy, said President Ranil Wickremesinghe addressing a High-Level event on Strategies and Actions to Accelerate Sri Lanka’s Transition to a Green Growth Pathway, held at the Grand Ballroom, Hilton Colombo yesterday morning (06).

He said further that the Sri Lankan Government prepared a Natural Adaption Plan and National Environment Action Plan to ensure a green economy and a better world by 2050.

The event was organized by the Ministry of Environment and the Global Green Growth Institute (GGGI).

A new Climate Change Act will be formulated while a new Environment Act will be drafted to replace the old one which will cover reforestation, forest cover and tree cover.

He also added that Sri Lanka is to be the first one in the region to recognize some of its assets as living entities. The Knuckles Range, Horton Plains, Peak Wilderness, the Sinharaja Forest, the Mahaweli River and Adams Bridge will be hence identified as living entities.

The statement made by President Ranil Wickremesinghe is as follows.

The signing of the Host Country Agreement with the Global Green Growth Initiative tomorrow, will be the first steps that we will be taking to establish a green economy and meet climate change goals.

I welcome the eighth Secretary General of the United Nations and the President of the Assembly and Chair of the Council of the Global Green Growth Institute (GGGI) Ban Ki-moon for the signing of the Host Country Agreement with the Global Green Growth Initiative. Hence, Ban Ki-Moon will be associated with two historic agreements signed in Sri Lanka in which the first paved the way for reconciliation.

We are seriously concerned of the situation on climate change and the actions taken. What has happened so far is insufficient and the last conference of parties did not achieve the results that we desired.

The low income countries and the middle income countries are striving for economic development while protecting living standards with insufficient funding. So these countries are committed to a call for action by the developed countries to deliver their funding pledges by doubling their funding which is essential.

I realize that some developed countries are experiencing a recession this year, but nevertheless the targets had not been met earlier. So there has to be a full commitment of how we are going to meet the targets and what assistance is required. The other issue is the need for compensation for the developing countries where the emissions so far were not the responsibility of our countries.

The third issue is how to address the loss and damages. This is not the issue of asking the developed countries to spend a lot of money for further development of the developing countries. Let us work out a sort of list, combine the money that is needed and then see how we are going to raise it. There has to be a contribution by them, as well as a contribution by us. But let’s agree on what we have to do.

The fact is that the achievements of the last COP26 meeting had not been fulfilled so far, worries us. Glasgow was a good turning point. The initiative taken by former Prime Minister of the UK Boris Johnson was important, but it was not followed up.

We must ensure that those targets are met. Therefore, the Government of Sri Lanka instructed the Minister of Foreign Affairs and the Minister for Environment to sound out other developing countries with whom they spoke last time on how a joint action plan could be made. Perhaps, a meeting of the heads of government, of the concerned countries could be convened in the UAE, prior to the next conference.

That is the only way that we can achieve results and we must go hard on it as there is no halfway house. We have to insist that these are goals and these are our minimal demands. It’s either the minimum demands or it is far better to call it a day if we are not going to achieve this result.

Sri Lanka is in the process to decrease carbon emissions by 14.5 percent by 2030 and more thereafter. We are creating the Climate Change Office operating under the Presidential Secretariat to coordinate all actions in regard to climate change. Then we have prepared our natural adaption plan and their national environment Action Plan.

All of this is being taken as the initiative by our government so that we ensure a green economy and a better world by 2050. We are developing the net zero 2050 plan that aims for carbon neutrality. We will not increase further energy capacity via coal power.

We will phase out the fossil fuel subsidies. We are already doing that and we have come under attack from the Opposition for phasing it out. And we will aim for 70 per cent of renewable energy for power generation by 2030.

There are many initiatives that we will be taking for this period. Firstly, a new Climate Change Act, which will incorporate the Climate Change Office, will be formulated. Then a new Environment Act will be formulated to replace the old one, which was enacted in the early 1980s, and one which will cover reforestation forest cover and tree cover.

The last one is to recognize some of our assets as living entities. The Knuckles Range, Horton plains, peak wilderness, the Sinharaja Forest, the Mahaweli river and Adams Bridge will be identified as living entities and that will be the first in the region to do so.

Final is the setting up of the International Climate Change University. We want to start it as a Postgraduate University and a university for training officials in all regions in the Indian Ocean, and in Africa to prepare the world for meeting the climate change goals and a new climate change and new green economy.

Now we are grappling with the issue of a green economy. That’s where we want to go. We find that we have the potential, especially on renewable energy, with the help of the Asian Development Bank we are assessing what our capacity for renewable energy and green hydrogen would be. Some say we will have an excess capacity of about 30 Giga-watts, but, some say 40, some say 50.

But we want to have the assessment made by the Asian Development Bank. So, we have already called for investment in this region. This is one area that we can prosper.

With regard to our economic base, we are looking at the new technologies, which certainly will not be involved with fossil fuel and to have new manufacturing and service industries based on industry for technology to modernize agriculture. Accordingly, we will be moving towards the green economy. But we are going to face difficulties. One is the lack of capacity.

And we also need great access to international financing. We will also be able to financially engineer the debt. By using the green financial instrument we could reduce the present debt load. Our domestic policy will be geared to our climate prosperity plan. So this is the path that Sri Lanka wishes to follow, and I have no doubt that the GGGI will help us to achieve this. The agreement we will sign tomorrow will be the first in the steps that we will take.

Former Secretary General of the UN and the President of the Assembly and Chair of the Council of the Global Green Growth Institute (GGGI) Ban Ki-moon addressing the gathering said that he learnt about those changes that took place during the last six and a half years since his last visit and added that he was confident that democracy and sustainable economic development in the country could be achieved under the wise leadership of President Ranil Wickremesinghe.

Environment Minister Naseer Ahamed addressing the occasion explained in detail the steps that the government is planning to take in regard to a green economy and meeting the climate change targets for 2050.

Secretary to the Ministry of Environment Dr Anil Jasinghe and Asia Regional Director and Head of Programs, GGGI Dr Achala Abeysinghe also addressed the event.

The Panel Discussion included panelists Director (Climate Change) Ministry of Environment Ms. Kumudini Vidyalankara, Chief Executive Officer Dilmah Tea and chair of Biodiversity Sri Lanka Dilhan Fernando, Chief Executive Officer of the National Development Bank Dimantha Seneviratne, Senior Research Professional of the Center for Poverty Analysis Ms. Karin Fernando and Senior Professor of the University of Peradeniya Prof. Buddhi Marambe.

Ambassador of Korea to Sri Lanka Santhush W. Jeong, Foreign Affairs Minister Ali Sabry, Senior Advisor to the President on National Security and Chief of Staff to the President Sagala Rathnayake and, Senior Advisor to the President on Climate Change Ruwan Wijewardena also participated in this event.

Sri Lanka Original Narrative Summary: 07/02

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Sri Lanka Original Narrative Summary: 07/02

  1. Foreign Minister of Bangladesh Abdul Momen says Sri Lanka is expected to pay back the USD 200 mn it borrowed from Bangladesh in a currency swap agreement in May 2021 by September 2022.
  2. Former Secretary General of the United Nations Ban Ki-Moon arrives in Sri Lanka.
  3. Foreign Minister Ali Sabry offers assistance of rescue services to Turkey, following 2 major earthquakes that struck that country: Foreign Ministry also says no Sri
    Lankan has been affected due to the earthquakes.
  4. President Ranil Wickremasinghe swears in Justice K P Fernando as a Supreme Court Judge: Justice N B Karunaratne as the President of the Court of Appeal: High Court Judge M A R Marikkar as a Judge of the Court of Appeal.
  5. Supreme Court Judge and Chairman of the Presidential Commission of Inquiry to investigate the findings of preceding Commissions and Committees, Justice A H M D Nawaz submits synopsis of the recommendations in the draft final report of the Commission to President Ranil Wickremesinghe.
  6. Private Hospital Development Department’s Director Dr Dhammika Alahapperuma says all private hospitals and health institutes in the country should be registered with the Private Health Services Council before 28th February: also says about 10,000 private health institutions have not been registered yet.
  7. President Ranil Wickremasinghe says Sri Lanka has the potential to establish the green economy, specially via renewable energy, to ensure a green economy and a better world by 2050.
  8. National Anthem sung in Sinhala & Tamil at the Independence Day Celebrations at Galle Face Green on 4th February, after several years: the National Anthem was written in Sinhala by Ananda Samarakoon and translated into Tamil by Sinhala & Tamil expert M. Nallathambi.
  9. State Minister of Finance Shehan Semasinghe says losses of 52 strategically important SOEs amounts to over Rs.800 bn in 2022: also says the Govt is now concentrating on the SOEs that have caused the heaviest losses such as SriLankan Airlines, CPC and CEB, and restructuring those.
  10. Professionals’ Trade Unions Alliance declare trade union action on 8th February to protest against the Govt’s tax hike: GMOA Secretary Dr Haritha Aluthge says doctors of the GMOA will also not engage in private channelling practice and regular services, on that day.

A reflection on the similarities between 1971 and the current crisis

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A reflection on the similarities between 1971 and the current crisis

As the 75th anniversary of independence gathers steam, it will be important to reflect on the gradual erosion of checks and balances and the rule of law. No crisis, be it in 1953, 1971, 1983, the long civil war, or the current crisis, has seen a desire for accountability, good governance, commitment to social justice and economic competence from the three families that have ruled the country since independence. Instead, they have demanded more centralised and unaccountable power. Currently the Rajapaksa clan and several notable personalities from the UNP have combined to crush the demand for meaningful political change, using the draconian power enshrined in the Executive Presidential constitution, with such repressive legislation as the Prevention of Terrorism Act, whereby a person can be held without charge for up to two years.

This essay will look at the economic and structural reasons that lay behind to the 1971 JVP insurrection and led to the current economic crisis.

1971

Like the current crisis, the economy in the seventies was characterised by sinking export income, growing foreign debt and escalating unemployment. Throughout the 1960s the size of the industrial sector remained static and hovered between 12 and 13 per cent, with the majority of income derived from the service sector and agriculture. In the export sector there was a fundamental dependence on agricultural products. The country was caught in a classic economic pincer movement and still is – declining export prices and rising export costs.

The country’s debt rose from Rs 95 million in 1957 to Rs 349 million in 1966, and again to Rs 744 million in 1969. Then as now, the money to pay for the foreign debt came from foreign loans and the running down of the country’s foreign exchange reserves.

Like today, foodstuffs made up a large part of county’s imports around 53 per cent.

Unemployment continued to rise in 1971. Out of a labour force of 4.4 million, 585,000 were officially unemployed. The economic authority of the time, Dr N.M. Perera, estimated the figure to be around 700,000.

Out of the 585,000 who were unemployed, 460,000 were in the rural areas and 250,000 were aged between 19 to 24. 167,000 of these had received a secondary education or went on to tertiary level.

The children of the era which began in 1956, the “beneficiaries” of the Official Languages Act, were not given the economic fruits promised to them. As a result of government repression in 1971, though never acknowledged by the country’s rulers, around 10,000 to 15,000 young Sinhalese were killed and tens of thousands more were imprisoned and tortured without due process. In contrast, according to the government, 61 civilians and 63 members of the armed forces lost their lives. The security forces’ extra-judicial killings and torture escaped scrutiny and impunity became the norm.

To prosecute the leaders, of whom I was one, the rule of law was trampled on, habeas corpus was waived and confessions gained by torture were admissible. The murder of countless thousands of Sinhalese youth by the security forces has never been examined.

The repressive playbook was set: an unwillingness to examine and fix structural issues, be they economic, political and judicial, accompanied by ever more restrictive and unaccountable measures and a marked reluctance to investigate crimes committed by the state.

An economic snapshot before the second coming of the Rajapaksas.

By the 1980s the economic direction changed, neo-liberalism became the mantra, and welfare provisions were gradually dismantled. Lanka now relied on tourism, garments, remittances and tea. National debt continued to rise

Billions of dollars were spent on vanity projects by the ruling clan: airports, stadiums, freeways, convention centres and a seaport, with no thought of who would need or use them.

Debt by the 2000s had risen to 79 per cent of Gross Domestic Product (GDP). It continued to rise and rise, reaching 100 per cent just before Covid struck. The economic instability is exacerbated by the fact that the top 20 per cent of the population have 42 per cent of the Island’s income, whilst the lowest 40 per cent make do with 17.8 per cent.

Accession of Gotabaya and the latest Resurrection of Ranil

The economy contracted after the fall in tourism as a result of the 2019 Easter bombings, putting a strain on the country’s foreign currency reserves. Gotabaya Rajapaksa exacerbated the crisis by cutting taxes collected from a very small base, costing the country hundreds of billions of rupees. Next, he banned the import of fertilisers, partially due to the lack of foreign exchange to pay for them. Agricultural production declined at an alarming rate, in particular vital export earners like tea and rubber. The economy went into freefall, with a shortage of food, fuel, medicine, cooking gas and other essentials. Whilst the top 20 percent had the economic means to cope, for the vast majority the burden was catastrophic.

A spontaneous protest movement erupted which forced the resignation of the then president Gotabaya Rajapaksa and the installation of the veteran serial aspirant, Ranil Wickramasinghe. Instead of opening dialogue with the protestors and dealing with their legitimate demands, we got state repression and the scapegoating of the protestors. The same people who looted the public purse and were ineffectual economic managers are in charge of the recovery!  Solutions on offer do not deal with the heart of the problem: the mismanagement, corruption and wastage prevalent in the economic and political system. Those least able to pay will be forced to shoulder the burden, and the structural issues, if not addressed, will lead to another economic and political crisis.

Conclusion

It is vital that celebrations to mark the anniversary of independence be tempered by reflection on how the country got to the current crisis and how it should be fixed. Otherwise, we will be forced to relive past disasters. As 1971 and 2020 remind us, the failure to change the system comes with enormous costs, both at a personal and economic level. It is the least we can do for those thousands of young people being detained on spurious grounds and those nameless 15,000 young people who lost their lives at the hands of the state in 1971.

Dr Lionel Bopage

25 January 2023

AFGHANISTAN: RSF and 14 media outlets call for the release of French-Afghan journalist Mortaza Behboudi, held in Kabul

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AFGHANISTAN: RSF and 14 media outlets call for the release of French-Afghan journalist Mortaza Behboudi, held in Kabul

Reporters Without Borders (RSF) and 14 French media outlets and production companies with which Mortaza Behboudi has worked are calling on the Taliban regime to release the French-Afghan reporter who has been imprisoned for a month in Kabul.

We remained silent for 30 days about the detention of Mortaza Behboudi, a journalist with French and Afghan dual nationality who is being held in a prison in Kabul, the Afghan capital. Today, we are letting the world know that he was arrested in Kabul one month ago, on 7 January, in the hope that he will be released as quickly as possible and will be able to return to France. For the past month, we have done everything possible, in various capacities, to obtain his release. His imprisonment is truly absurd.

Behboudi began his career as a photojournalist at the age of 16 in Afghanistan, the country of his birth. When he was 21, he fled to France because he had been threatened, and was given a refuge in the Maison des Journalistes (Journalists’ Home) in Paris. Along with other exiled journalists, he created a news website called Guiti News. He soon began freelancing for French and Francophone media outlets including France Télévisions, TV5 Monde, Arte, Radio France, Mediapart, Libération and La Croix. He co-authored a series of reports called Across Afghanistan under the Taliban that was published by Mediapart and was awarded the Bayeux Prize for War Correspondents and the French National Daily Varenne Prize. He contributed to a report entitled Young Afghan girls sold in order to survive that was broadcast by France 2 and was also awarded the Bayeux Prize in 2022.

Behboudi returned to Afghanistan for the purpose of reporting on 5 January and was arrested barely 48 hours later when was about to collect his press accreditation. On 15 January, his mobile phone called the assistance unit at Reporters Without Borders (RSF). As no message was left, it is impossible to know whether it was Behboudi who called or whether one of his jailers used his phone. Since then, no one has answered when his number is called. All we know is that after being held in a Kabul for 11 days for not showing his accreditation, he was transferred to another prison in Kabul and is said to be accused of spying.

We appeal to the Taliban government to end this senseless situation. Mortaza Behboudi is a well-known journalist, who is respected and appreciated by his media colleagues. We hope that our message will reach the Afghan capital and be heard in the offices of the authorities that took the decision to arrest him and who hold the key to his release. Messages have already been sent. RSF has opened a communication channel with the Taliban authorities.

We thank the French authorities for the efforts they have already made and we count on them to do everything possible in the future.

Signatories:

Stéphane Allies, Mediapart editorial co-director

Dov Aflon, Libération editorial director

Erik Berg, franceInfo TV director

Philippe Brachet, Arte Reportage editor-in-chief

Vanessa Burgraf, France 24 director

Jérôme Chapuis, La Croix editorial director

Sonia Delesalle-Stolper, Head of International Service at Libération

Christophe Deloire, secretary-general of Reporters Without Borders (RSF)

Grégoire Deniau, TV5MONDE editorial director

Carine Fouteau, Mediapart editorial co-director

Vincent Giret, director of news and sport at Radio France

Thomas Hofnung, Head of International Service at La Croix

Françoise Joly, TV5MONDE news director

Alexandre Kara, France Télévisions news director

Bernard de La Villardière, director of the production company Ligne de front

Elise Lucet, editor and presenter of the France 2 programme “Envoyé Spécial”

Elsa Margout, director of magazines at France Télévisions

Franck Mathevon, Radio France news director

Marco Nassivera, Arte TV news director

Philippe Pécoul, director of the TF1 evening news show “Sept à huit”

Edwy Plenel, Médiapart president

Muriel Pleynet, France Télévisions editorial director

Harry Roselmack, Managing Director of HTO productions

Martin Weill, “Les Reportages de Martin Weill”, TMC

Reporters Without Borders (RSF)

LAUGFS announces price hike

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LAUGFS announces price hike

By: Isuru Parakrama

Colombo (LNW): Private LP Gas vendor LAUGFS has announced it will be increasing the price of domestic gas cylinders.

Accordingly, the price of a 12.5 kg domestic LP Gas cylinder will soar by Rs. 200 and will be sold for Rs. 5,280.

The price of a 05 kg cylinder will soar by Rs. 80, to be sold for Rs. 2,112.

Central Bank kicks off banking sector asset quality review

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Central Bank kicks off banking sector asset quality review

The Central Bank has kicked off an asset quality review of the country’s banking sector to identify possible stresses in different pockets of banks’ balance sheets as they provide enormously on possible bad loans and other financial asset losses in 2022 with the final stretch of moratoria expiring early this year.

Despite remaining stable and resilient, Lankan banks are undergoing their most challenging operating conditions in their history with growth and profits faltering amid rising non-performing loans and capital risks.

Central Bank Deputy Governor Yvette Fernando recently said nine banks that have been identified as having asset quality stress will be reviewed soon.

Fitch Ratings warned that Sri Lanka’s banks are likely to face continued asset-quality pressure in 2022, as rising macroeconomic stresses stemming from the sovereign credit profile pose a threat to borrowers’ repayment capacity, alongside the conclusion of most relief measures in 2021.

“We believe Sri Lankan banks face added asset-quality pressure from their Government securities holdings, particularly those denominated in foreign currency which accounted for around 6.5% of Fitch-rated banks’ total assets at end-9M21,” the rating agency noted.

The Deputy Governor also said the review of the banks will be conducted in a phased manner. “We will review six banks in the first phase and another three banks thereafter,” Fernando added.

In April, Fitch Ratings again placed the National Long-Term Ratings of 13 Sri Lankan banks on Rating Watch Negative (RWN).

The banks include; People’s Bank, Commercial Bank of Ceylon PLC, Hatton National Bank PLC, Sampath Bank PLC, National Development Bank PLC, DFCC Bank PLC, Seylan Bank PLC, Nations Trust Bank PLC, Pan Asia Banking Corporation PLC, Union Bank of Colombo PLC, Amana Bank PLC, SANASA Development Bank PLC and Housing Development Finance Corporation Bank of Sri Lanka.

“We are looking at each bank for the potential risk that they could face going forward in rising NPLs, interest rate impact and exchange rate impact and if they are going to have any pressure on capital and liquidity,” said the Central Bank Governor. Nandalal Weerasinghe.

“Going forward that’s why one of the exercises we are doing is the ‘Asset Quality Review’, for us to understand the kind of stress the banks are going to face in the future. Based on the work we do with the banks, we can come out with recommendations on how to deal with that situation,” he said.

The Sri Lankan banking sector is witnessing record provisions against possible bad loans and other financial asset losses stemming from their exposure to sovereign bonds, which has undermined their profitability to a greater extent.

The risk of domestic debt restructuring remains an overhang, which could add enormous pressure on the capital Weerasinghe declined to comment on the possibility of a domestic debt restructuring claiming it’s too premature.

Meanwhile, a large number of borrowers are also falling behind their loan repayments after the interest rates rose at least three times from where they were before the economic crisis, with the Central Bank raising the key policy rates at a record pace to tamp down runaway prices.

Bangladesh hopeful on Sri Lanka repaying US$ 200 Mn in September 2023

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Bangladesh hopeful on Sri Lanka repaying US$ 200 Mn in September 2023

Bangladesh is expected to get back the money, which was borrowed by Sri Lanka, from September this year as the country’s economic situation is improving, Bangladesh Foreign Minister AK Abdul Momen has said.

“Sri Lanka is gradually doing better. They are recovering slowly,” Foreign Minister AK Abdul Momen told reporters.

On January 12 this year, Bangladesh Bank granted Sri Lanka six more months to repay the loan after the Island nation requested to extend the repayment period due to its prolonged economic crisis.

In a friendly gesture, Bangladesh extended the loan to cash-strapped Sri Lanka under a currency swap arrangement in 2021.

Bangladesh remains hopeful that Sri Lanka will repay the debt of $200 million that it owes to the country by September 2023,and it was supposed to return in three instalments in February and March 2023.

Although Sri Lanka was due to make the repayment earlier, Bangladesh extended the deadline for repayment in light of the crippling economic crisis which had plagued Sri Lanka.

Bangladesh Bank, Bangladesh’s central bank, has in principle approved a $200 million currency swap agreement with Sri Lanka, which will help Colombo tide over its foreign exchange crisis, according to media reports from Bangladesh, quoting the bank’s spokesman.

Sri Lanka, staring at an external debt repayment schedule of $4.05 million last year year, is in urgent need of foreign exchange.

The two sides have to formalize an agreement to operationalize the facility approved by Bangladesh Bank. Dhaka decided to extend the facility after a request by Sri Lankan Prime Minister Mahinda Rajapaksa to Bangladesh’s Prime Minister Sheikh Hasina.

In this context, a currency swap was effectively a loan that Bangladesh has given to Sri Lanka in dollars, with an agreement that the debt will be repaid with interest in Sri Lankan rupees.

For Sri Lanka, this was cheaper than borrowing from the market, and a lifeline as is it struggles to maintain adequate forex reserves even as repayment of its external debts looms. The period of the currency swap will be specified in the agreement.

Bangladesh has not been viewed so far as a provider of financial assistance to other countries. It has been among the most impoverished countries of the world, and still receives billions of dollars in financial aid.

But over the last two decades, its economy has pulled itself up literally by the bootstraps, and in 2020, was the fastest growing in South Asia.

Bangladesh’s economy grew by 5.2 per cent in 2020, and was expected to grow by 6.8 per cent in 2021. The country has managed to pull millions out of poverty. Its per capital income just overtook India’s.

This may be the first time that Bangladesh is extending a helping hand to another country, so this is a landmark of sorts.

Bangladesh’s forex reserves were a healthy $45 billion. Despite fears that the pandemic would hit remittances, Bangladeshis living abroad sent over $21 billion. It is also the first time that Sri Lanka has borrowed from a SAARC country other than India.

CB requests banks to consider restructuring loans of high salaried public staff

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CB requests banks to consider restructuring loans of high salaried public staff

Sri Lanka’s commercial banks are now faced with debt default issues of borrowers hit by unprecedented income tax and corporate tax hike with Non-Performing Loans (NPLs) increasing beyond its control, several general managers of banks complained.

On top of these grave financial issue the Central Bank Governor Nandalal Weerasinghe says that Sri Lanka’s banks should explore restructuring loans of high income earning employees hit by progressive tax, Central Bank Governor Nandalal Weerasinghe said as progressive income taxes were imposed at lower thresholds amid high inflation following a sovereign default

The Central Bank of Sri Lanka (CBSL) forecasts Non-Performing Loans (NPLs) as a percentage of all bank loans to reach 8% in 2022, from 4.5% in 2021, while it expects the economy to contract by around 8%, in a revision to its previous forecast of a 7.5% contraction.

CBSL is working with banks to minimize the economic contraction’s impact on the banking sector as NPLs will rise as a result of the contraction, and added that the NPL ratio is forecasted to be 8% for 2022.

He said the economy would contract by around 8% 2022, surpassing the CBSL’s previous forecast of a 7.5% contraction.

He added that a sharper contraction of the economy means recovery can be faster from next year onwards, as Sri Lanka could start to recover in the second half of 2023, with attention to external factors such as a possible global recession, and the possibility of Sri Lanka maintaining normal economic conditions while sectors such as tourism make a fast recovery

Weerasinghe noted that picketing state enterprise executives have made complaints along with other workers of such agencies such as Sri Lanka Port Authority that high progressive taxes were resulting in making their bank accounts into overdraft after loan installments were deducted.

“Yes, they have mentioned that,” Governor Weerasinghe said responding to questions from reporters.

“We have told the banks earlier as well. Because the interest rates are high and their business being reduced, the SME sector, the repaying capability has reduced.

“We have told them to explore their repaying capabilities and restructure their loans in order to safeguard both sides. At this time also we are asking the banks to do that.”

Further some state owned enterprises used to pay the Pay-As-You-Earn tax, of salaried employees in the past.

It is not clear whether the volumes of loans involved were large enough to cause concerns.Bad loans of the banking system overall had risen after the rupee collapsed, reducing the spending power in the economy, while rates also went up as money printing was scaled back, foreign funding stopped and the budget deficit widened.

Sri Lanka revenue in January comes down lower than expectations

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Sri Lanka revenue in January comes down lower than expectations

Sri Lanka’s revenue in January is far below the expected increase of 69 percent due tax increases and not sufficient to meet all current expenditures except those payments pertaining to salaries, pensions, welfare, pharmaceuticals and debt servicing, official sources said.

Sri Lanka’s government revenues were Rs.158.7 billion rupees in January 2023 but expenditure and debt service remained high, In January 2022 total revenues were Rs.104.5 billion without any tax increases according to central bank data,

Comparatively there was an increase of Rs 54.2 billion in January 2023 considering the January 2022 revenue of Rs.104.5 billion where there were no tax revisions at that time, economic analysts said adding that the revenue collection authorities should have been collected Rs.230.83 billion to meet the target.

Without making unnecessary structural adjustment and streamlining the tax administration, the government will not be able to collect the tar getted revenue this year, they said.

The budget has aimed at increasing tax revenue by 69 percent to Rs. 3,130 billion in 2023 from this year’s Rs.1,852 billion while bringing down the budget deficit to 7.9 percent in 2023 from this year’s revised 9.8 percent

President Ranil Wickremesinghe has notified the Cabinet that the Government revenue for the month of January 2023 is far below the monthly expenditure estimates, and instructed all relevant authorities to curtail Government expenditure.

He further noted that the General Treasury too, is finding it challenging to meet all current expenditures except those payments pertaining to salaries, pensions, welfare, pharmaceuticals and debt servicing, the President’s Media Division (PMD) reported.

Sri Lanka’s tax revenues have risen sharply amid an inflationary blow off which had boosted nominal GDP while President Ranil Wickremesinghe has also raised taxes.

Departing from a previous strategy advocated by the IMF expanding the state and not cutting expenses, called revenue based fiscal consolidation, he is attempting to do classical fiscal consolidation with spending restraint, the pointed out

According to a note presented by President Wickremesinghe to the cabinet, public sector salaries cost Rs.87.4 billion.Pensions and income supplements (Samurdhi program) were Rs.29.5 billion Other expenses were Rs. 10.8 billion.Capital spending was Rs.21 billion.

Debt service was Rs. 377.6 billion for January which has to be done with borrowings from Treasury bills, bonds and a central bank provisional advance of Rs. 100 billion.

This more recent drop in income from taxation along with a failure to acknowledge and re-structure the mounting debt earlier are the causes behind the current crisis, and not as some believe consequences of current global economic pressures relating to the Covid-19 pandemic and the war in Ukraine.

Equally, this is not a trap set by China to ensnare Sri Lanka, they claimed.

Govt to establish a ‘Personal Identity Secretariat’ soon

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Govt to establish a ‘Personal Identity Secretariat’ soon

By: Isuru Parakrama

Colombo (LNW): A ‘Personal Identity Secretariat’ is to be established at the Department of Registration of Persons building in Suhurupaya, Battaramulla in a move to provide all services related to documents involving the identities of persons from birth to death, revealed Public Security Minister Tiran Alles.

The establishment of this office was originally intended to be accomplished in a manner in which all services pertaining to birth certificates, death certificates, national identity cards and passports can be obtained under one roof, but was dragged in due the establishment of other government offices inside of the Department of Registration of Persons building, leading to the non-availability of space.

Addressing the problem, these ‘other’ government offices will be shifted to other buildings and the proposed ‘Personal Identity Secretariat,’ accordingly, will be established as planned, Alles revealed.

The Cabinet paper in this regard has been submitted by both the President and himself, the Public Security Minister went on, adding that the Cabinet’s approval has also been granted for the proposed establishment.

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