It is reported that the entire cabinet has decided to resign.
The decision was taken at an emergency special cabinet meeting convened by President Gotabhaya Rajapaksa this afternoon (06).
According to sources, the cabinet will resign on Monday morning.
It is reported that Ranjith Siyambalapitiya has resigned from the post of Deputy Speaker again.
Accordingly, he has submitted his resignation letter to the President.
The Government has decided to strictly curb state expenses owing to the grave financial crisis the country’s Treasury was facing, the Finance Ministry announced this week.
The Finance Ministry will be taking the crucial public sector and state institutions’ high unnecessary spending head-on by strictly restricting its expenses through several progressive measures. The Budget 2022 has allocated a total of Rs.2.51 trillion to be spent by ministries and departments.
The expected revenue of Rs 1.8 trillion was not sufficient even for recurrent expenditure as salaries of public sector employees alone amounted to Rs. 1 trillion, a senior Treasury official said.
The ministry has already informed the Cabinet that state revenue has decreased drastically as the economy faces a severe crisis with revenue not sufficient to meet even recurrent expenditure. The government has also decided to suspend all recruitment to the state service.
Public expenditure has to be strictly controlled so that it can only be used for the most essential services, he added.
The Treasury Secretary on Tuesday issued a circular to control expenditure in the public service amidst dwindling revenue and sky- rocketing public spending.
The circular has called for a project expenditure control system and the reduction of fuel usage and communication expenses, and suspending public sector recruitment.
The circular stated that the Sri Lankan economy has approached a highly critical juncture and with that, the requirement of providing an efficient and productive service for the public while using the public finance in a most responsible and economical manner has become a foremost priority than ever before.
Enhancing the government revenue is a crucial requirement to control this challenging situation. However, as it takes time, public expenditure needs to be well-tightened, making it available only for the most essential services for a certain period, the ministry said.
“Therefore, the restrictions already have been introduced by several circulars controlling the payment of fuel and communication allowances, restrictions of water and electricity expenditure, suspending the construction and hiring buildings”.
Measures will be taken to stop foreign study tours and trainings conducted using local funds, suspending the payment of various allowances made at ministry or institution level without the approval of the Cabinet of Ministers and avoiding any new commitments for various welfare/subsidy programmes and development programmes.
In addition, the circular says the stringent methods of controlling expenditure should be followed when incurring expenditure and implementing projects using domestic funds as well.
The International Monetary Fund (IMF) has requested Sri Lanka to implement a strict fiscal and monetary policy protecting the livelihoods of the most vulnerable poorest of the poor people.
“Fiscal policy should be devised on a revenue-based consolidation strategy that increases ability of the country to raise revenues and to address most critical spending needs while further tightening monetary policy,” Anne-Marie Gulde-Wolf, IMF Acting Director for Asia and the Pacific said this week.
On revenue-based consolidation, she said that wherever possible the taxes should be paid more by those that are well off compared to the most vulnerable segments of society.
The raising of revenue has become a very difficult and gigantic task after the present government’s action in 2019 to do away with a range of taxes and turning it around cannot be done overnight, Senior Commissioner of the Inland Revenue Department (IRD) Sarath Abeyratnesaid.
He noted that the country has lost more than Rs.1 trillion in tax revenue with a 33.5 per cent decline in the number of registered taxpayers (corporate and individual) in the country during the past two years.
This decline is most probably connected with particularly the increase in thresholds for Value Added Tax (VAT) and the abolition of Pay As You Earn (PAYE) tax and later replacing it by the Advance Personal Income Tax (APIT) which is an optional scheme, he pointed out.
A large number of tax files has to be closed and the expected economic stimulus has not been realised by not heeding to advise given to senior officials of the Treasury and IRD, he said adding that a handful of advisors controlled the public administration machinery.
Money printing or currency pumping and borrowing have become the order of the day instead of raising revenue from taxes and controlling public expenditure during the past two years, he said.
Monetary policy has to be tightened to keep inflation in check and there was a need for a flexible exchange rate, former Central Bank Deputy Governor Dr W.A. Wijewardena said.
The government has to increase taxes to meet rising public expenditure and suspending capital expenditure by the Finance Ministry is not sufficient to tackle the present fiscal crisis, he added.
Exporters are losing confidence in the industry’s outlook as firms face mounting challenges posed by increasing local and global economic risks as per the results the bi-annual Export Barometer Survey made public on Thursday 05.
This survey was designed and conducted by the Ceylon Chamber of Commerce (CCC) and the United States Agency for International Development (USAID)’s Partnership for Accelerating Results in Trade, National Expenditure and Revenue (PARTNER) project.
This is the second in the series, following the successful launch of the first survey report in November 2021.
The Export Barometer Survey is a bi-annual survey conducted to provide exporter insights over time.
The most recent iteration provides key insights into the foreign exchange shortage and other internal and external economic factors and strategies implemented by companies to navigate through the challenges.
It also continues to track exporter sentiments on key issues relating to industry competitiveness, such as digitalisation, transport, logistics, and facilitation.
The survey, compiled in February-March, received responses from 173 exporters of goods and services, including small and medium enterprises (SMEs) and women-owned and/or led enterprises.
The findings drawn from the survey also indicate a fall in confidence in exporter outlook for the first half of 2022, as a result of these challenges.
The Ceylon Chamber of Commerce noted seven key insights from the survey, including:
A majority of exporters saw an increase in revenue during the second half of 2021, in line with the strong export performance recorded by the country during the period.
However, there was an increase in underutilized capacity during the second half of 2021, compared to the first half of the year.
Due to the foreign exchange shortage, exporters faced difficulties in sourcing production and service input, with 72% of export firms having lost suppliers or faced delays in sourcing.
The majority of firms, particularly SMEs, were concerned about their ability to export in the future, due to production/service delays or losses in suppliers resulting from forex shortages.
A significant number of exporters are considering cost-cutting measures, such as reduction in hiring and freezing contract/part-time employment, due to the ongoing economic climate.
Despite this sentiment, most firms in the second half of 2021 have retained their employees, while keeping training budgets unchanged.
Most exporters continued export orders on the Business-to-Business (B2B) model, compared to Business-to-Consumers (B2C).
Similar to the previous survey’s findings, firms are leveraging online channels to drive sales, although they continue to provide less than 25% of total revenue for the majority of firms.
As such, there has not been a significant improvement in the utilisation of the digital landscape for exports during the last six months of 2021.
Only 60% of firms have found new export opportunities, compared to 75% in the previous survey. However, both SMEs and women-owned and/or led businesses have found new opportunities, and this number is higher compared to the previous survey.
Exporters stated that they require market access support and improvement in the regulatory process and recommended that a market-determined exchange rate be allowed to facilitate export competitiveness.
A fall in confidence in export outlook can be observed, compared to the previous survey. However, exporters continued to be more confident about the growth of their export business in the first half of 2022 than in the economic outlook. This export growth is expected to be driven by significantly higher unit prices of export orders
Members of the Samagi Jana Balawega have urged Speaker Mahinda Yapa Abeywardena to immediately stop the tear gas and water cannon fired by the police on protesters near Parliament.
It is reported that police have fired tear gas and water cannons to disperse protesters near the parliament entry road at Polduwa Junction in Battaramulla.
Students of the Inter-University Student Federation as well as residents of the area had joined the protest.
President Gotabhaya Rajapaksa has convened an emergency cabinet meeting.
Accordingly, this special cabinet meeting is scheduled to be held today (06) at 5.30 pm at the President’s House, Colombo Fort.
It is reported that the crisis situation in the country will be discussed at this special cabinet meeting.
Lawyers are appearing before the Fort Magistrate’s Court for the removal of ‘Gota Go Gama’ near the Presidential Secretariat, Galle Face – while another group of lawyers is speaking in support of the people’s struggle against it.
The request was first made to Colombo Magistrate Harshana Kakunawela and he has withdrawn from considering the request and it has now been referred to Magistrate Thilina Gamage.
It is said that the message is being shared on social media and people are coming to the Galle Face protest area.
Former Prime Minister Ranil Wickremesinghe today (6) addressed the accusations levelled against him by TNA M.P. Rasamanickam. He stated that statement made by the M.P. was false.
He drew attention to the fact that Rasamanickam was originally a member of the UPFA when he obtained the organiser post for the Paddiruppu electorate in Batticaloa from Mahinda Rajapaksa on February 21 2013.
The former PM stated that that he has never had a deal with the Rajapaksas, and reminded the public that the Rajapaksas had a deal with the LTTE to defeat him at the 2005 Presidential election.
He said he supported Ranjith Siyambalapitiya’s decision to resign from the Deputy Speaker’s post after leaving the Government and instead seek the confidence of the House to retake the post from the Opposition. He said it would set a good precedence.
He said he told Siyambalipitya that he would support him if he was contesting for the post of Deputy Speaker from the Opposition benches but not from the Government benches. He said once he had given his word he saw no reason to change it.
On Wednesday evening Wickremesinghe said he was informed by the media that the Government would not be putting forth a candidate as they were not keen to test their majority in Parliament against Siyambalapitiya.
The next day when he spoke to SLFP M.P. Nirmal Siripala he confirmed this same story. Ranil Wickremesinghe stated that if Siyambalapitiya was being proposed by the Independent group he would support him.
Wickremesinghe was subsequently informed that there was a problem with the TNA and their support for Siyambalapitiya. He spoke to the TNA and asked whether the two groups could come together. The TNA refused saying if the SJB did not field a candidate they would do so themselves.
He then suggested that since the Government was not nominating a candidate the two opposition groups can go for a vote but afterwards they must work together again.
He said he discussed this matter with TNA MPs Sumanthiran, Rasamanickam and Adaikalanathan while MPs Mano Ganesan, Anura Dissanayake and Sritharan were in the vicinity. He said the focus of the discussion was how could they resolve this matter.
He went on to explain that when Ranjith Madduma Bandara gave him the No Confidence Motion against the Government he said he would support it. When the No Confidence Motion against the President was provided by Sumanthiran he was the first to extend support to it.
The former Prime Minister said that Rasamanickam has made a false statement against him and that the result was people were now preparing to surround his house based on this false accusation.
Ranil Wickremesinghe said he has no problem if people want to demonstrate against him, but he said it is wrong to use Parliament speeches to threaten people.
He went to state that following yesterday’s performance in Parliament the whole country has turned against the Parliamentarians. They accused the MPs of wasting an entire day fighting over personal agendas. He said the House has lost sight of the problems facing the people of the country. The people don’t have fuel or money, and that by June we don’t know what will happen in the country.
Ranil Wickremesinghe accused the Parliament of failing in their duties to the public, that they have been unable to come up with a solution for the crisis. He said the House has only spoken and attacked each other.
He questioned whether the Parliament can say that they are with the people or that they have the confidence of the public. He said that the only concern of the House should be to solve the crisis in the country
The former Prime Minister urged that the House take some steps to reassure the public they are working for them, otherwise the Parliament would be surrounded by the public.
He said that they must make a decision before today’s proceeding begin on what the Parliament plans to do in regards the crisis, otherwise they should all go home.
