Sri Lanka aims to set up a financial safety net of Rs 200 billion to provide social security support to the needy amidst the worst economic crisis in the country, President RanilWickremesinghe has announced.

The government is making maximum effort to reduce the impact through providing financial and logistical support,” said Mr.Wickremesinghe, who also holds the post of the finance minister of the debt-ridden economy.

President Wickremesinghe also explained that due to the pending food shortage, he was launching the food security programme in the country.

He was hopeful that through the food security programme, the government of the crisis hit country would be able to provide food free of charge to 10 percent of the population, who were unable to afford three meals.

He had previously warned of a food crisis in addition to the ongoing economic crisis, which has also left the country in shortage of fuel, gas, medicines as well as essential supplies.

Discussions were underway with Japan to regain their confidence and secure their support, the President  added.

He said that countries were stepping forward with assistance in food and medical supplies, however, no country was providing fuel free of charge.An IMF bailout programme is being currently worked out .

The government has introduced a new tax called “SocialSecurity Contribution” (SSC) at 2.5% on the annual threshold turnover of companies  exceeding Rs 120 million.

 The Finance Ministry estimates Rs 140 billion revenue throughthis tax. The SSC appears to be similar to NBT since it is a turnover tax although details of the base have not been providedIn 2018 and 2019, revenue collection from NBT was Rs 105 billion.

 The tax base for 2022 could be estimated as Rs 128 billion by considering nominal GDP growth since 2019.

 SSC rate (2.5%) is 25% higher than the NBT rate (2%)which could provide a potential SSC revenue of Rs 160 billion.

 However, theSSC tax-free threshold (turnover Rs 120 million per annum) is 10 times higher than the NBT threshold (Rs 12 million per annum). 

A 30% reduction in collection could be assumed due to this higher threshold (reducing the potential SSC collection from Rs 160billion to Rs 112 billion). 

As Sri Lanka grapples with economic and political turmoil with some help from India and China, the lack of US presence stands out, but analysts say this may be due to Washington’s strategic convergence with New Delhi, even if it could do more to support Colombo.

The US is likely to take on a stronger role in Sri Lanka’s economy only after Colombo reaches a debt restructuring agreement with the International Monetary Fund (IMF), the experts added.

India has promised to remain supportive of President Ranil Wickremesinghe’s new administration as Sri Lanka struggles with a shortage of food, fuel and medicines.

New Delhi has provided about US$1.5 billion to Colombo for critical imports, and another US$3.8 billion in the form of currency swaps and credit lines. China rejected Sri Lanka’s debt restructuring request, but provided about US$75 million in humanitarian aid and promised to “play a positive role” in Colombo’s talks with the IMF.

The US assistance was more modest, with the US Agency for International Development (USAid) announcing US$11.75 million in economic crisis aid in June and President Joe Biden promising another US$20 million to boost food security.

Secretary of State Antony Blinken last month called on Sri Lanka’s leaders to quickly find long-term solutions to the crisis. USAid administrator Samantha Power last week hailed India’s swift move to assist Colombo, but slammed China for offering “opaque loan deals at higher interest rates than other lenders”.

Bankrupt Sri Lanka has suspended repayment on its US$51 billion foreign loans. It is also preparing a debt restructuring plan, a condition for a rescue package it is negotiating with the IMF. China, which accounts for 10 per cent of Sri Lanka’s debt, has resisted offering a debt cut.

In response to Power’s remarks, China’s foreign ministry spokesman Zhao Lijian said last Thursday that tariff barriers imposed by the US had aggravated the economic and financial situation of Sri Lanka and other developing countries.

The US should ask itself what it was doing for the sustainable development of nations like Sri Lanka, and “not use every opportunity to blame, smear other countries and engage in geopolitical games without any bottom line”, Zhao said.

Anu Anwar, a fellow at Harvard University’s Faculty of Arts and Sciences, said since the US supported India’s regional leadership, Delhi’s ongoing efforts in resolving Sri Lanka’s crisis “complement US interests

CHEC Port City Colombo in collaboration with the Colombo Port City Economic Commission (CPCEC ) successfully introduced the Special Economic Zone to 50 plus potential investors and members at a specially curated Breakfast meeting held at the Business Forum Event.

During the Business Forum senior management of Colombo Port City Commision (CPCC) and the CPCEC had meaningful one-on-one dialogues with leading institutions and leaders from the business community that cited a Special Economic Zone in Colombo was paramount in attracting Foreign Direct investment.

The event was a global platform for Sri Lanka’s first service-oriented Special Economic Zone (SEZ) to be showcased in the Business Forum, which was held in Kigali, Rwanda from the 21st to the 23rd of June 2022.

As a strategic partner of the Commonwealth Enterprise and Investment Council (CWEIC), Port City Colombo participated as a proud knowledge partner of the Commonwealth Business Forum, held alongside the Commonwealth Heads of Government Meeting (CHOGM) in Kigali.

It was the first and largest, in-person gathering for governments and businesses across the Commonwealth since the COVID-19 pandemic.

CHOGM 2022 attracted over 1,700 delegates from over 90 countries. Additionally, the Commonwealth has lately, embarked driving forward businesses and cultivating synergies amongst its member nations whilst also expanding upon the member nations of the Commonwealth itself.

Sri Lanka has always been touted for its strategic location. Besides its natural geographical advantage,it has akso connected to global supply chains.

Additionally, several bi-lateral and multilateral trade agreements are in place and there were several government’s initiatives to promote trade.

Overall, the event allowed CHEC Port City to engage and market the SEZ to a global audience whilst also inundating them on the value proposition at play and indicating why this could be a service-based hub in the South Asian region.

Given the interest we garnered during the event, the next step in realising the project’s potential is for the regulations to be passed and enacted so that the go-to-market.

Japan has halted 12 projects under Japan International Cooperation Agency (JICA) in Sri Lanka until the International Monetary Fund (IMF) provides a roadmap to the crisis-hit island, a top minister said.

“Twelve projects funded by Japan under JICA will be suspended until the IMF establishes a roadmap on Sri Lanka’s debts and its sustainability because the country has been declared bankrupt,” Minister of Ports, Shipping and Aviation Nimal Siripala de Silva told parliament on Wednesday August 10.

Sri Lanka’s relations with Japan was tested in the last two years after former President Gotabaya Rajapaksa who was closer to China scrapped a JICA-funded light railway transit (LRT) project claiming it was too expensive and unilaterally cancelled a 500 million US dollars trilateral deal with India and Japan to develop the Eastern Container Terminal (ECT) of the Colombo Port.

The LRT project was a 1.5 billion US dollar soft-loan project that would have solved some of the traffic issues in the Malabe corridor.

Sri Lanka has recently been trying to rebuild relations with Japan who previously poured many millions of dollars in funds to the country.

Since 1965, the Government has obtained Japanese Official Development Assistance amounting USD 8,829 million for 120 development projects and Japanese Assistance is provided through various schemes such as Yen loans packages, Project Grant Aid, Non-Project Grant Aid, Feasibility Studies and Technical Cooperation programmes.

Currently, 14 projects with approx. total value of USD 2500 million are being implemented under the JICA loan assistance mainly under the sector of Power, Water Supply and Drainage, Ports, Transport, Health, Telecommunication, and Rural Development etc.

Explaining the current progress of the development projects, a senior official said that the government expects the assistance of JICA in the areas of agriculture, skills development, health, and irrigation for the coming year.

Inspite of Sri Lanka’s economic and political issues, JICA, together with the Ministry of Health, launched a technical cooperation project with a budget of Rs.300 Million to strengthen capacities in the preparedness and development for diagnostics and treatment services to combat COVID-19, and the equipment and online training opportunities have been provided to the targeted hospitals.

In the Project, the essential equipment, including ventilator, blood gas analyzer, real time PCR machine, automated RNA/DNA extractor, and ultra-low temperature freezer, are distributed to the base hospitals in Teldeniya, Warakapola, Walikanda, Pimbura, Nawalapitiya, Hingurakgoda, Karawanella, and Avissavella (for mainly treatment) and District General Hospital Hambantota (for particularly PCR tests).

One of the specific objectives of this project is to improve quality of medical services relating to COVID-19 in the targeted hospitals by building up their operational management capacities.

The Project expects that the targeted hospitals appropriately test, diagnose, treat, and observe infected patients and those suspected of being infected, and perform effective and efficient operation management in the event of the pandemic.