By: Staff Writer

Colombo (LNW):IMF executive board has greenlighted the immediate disbursement of US$ 337 million second tranche of the US$2.9 billion Extended Fund Facility (EFF) arrangement for Sri Lanka.

The approval of the second tranche of the IMF loan follows its executive board’s completion of the first review under the 48-month EFF arrangement.

The IMF’s decision comes after the deal between Official Creditor Committee OCC and Sri Lanka came about a month after the island nation’s agreement with China’s Exim Bank covering about USD 4.2 billion of outstanding debt

On November 29, the Sri Lankan government and the OCC revealed that they had reached an agreement in principle on the financial terms of debt treatment.

The in-principle deal covers approximately USD 5.9 billion of outstanding public debt and consists of a mix of long-term maturity extension and reduction in interest rates.

On November 29, the Sri Lankan government and the OCC revealed that they had reached an agreement in principle on the financial terms of debt treatment.

The in-principle deal covers approximately USD 5.9 billion of outstanding public debt and consists of a mix of long-term maturity extension and reduction in interest rates.

In a statement issued following the Executive Board’s meeting, IMF’s Deputy Managing Director Kenji Okamura commended Sri Lanka’s performance under the EFF-supported program, saying that it has been ‘satisfactory’.

“All quantitative performance criteria for end-June were met, except the one on expenditure arrears. All indicative targets were met, except the one on tax revenues, he added. .”

The completion of the first review paves the way for an immediate disbursement of the much-anticipated second tranche of the IMF loan which amounts to SDR 254 million (approximately US$ 337 million).

This will bring the total IMF financial support disbursed thus far to SDR 508 million (approximately US$ 670 million).

The total amount of Sri Lanka’s EFF Arrangement is SDR 2.286 billion (about USD 3 billion) as of the time of program approval on March 20, 2023.

Sri Lanka plunged into its worst financial crisis in seven decades last year after its foreign exchange reserves dwindled to record lows.

But since locking down the IMF bailout of USD 2.9 billion in March 2023, the island nation has managed to partly stabilize its economy, bring down runaway inflation and rebuild currency reserves.

The EFF program supports Sri Lanka’s efforts to restore macroeconomic stability and debt sustainability, safeguard financial stability, and enhance growth-oriented structural reforms.

Meanwhile, Sri Lanka has reached in-principle deals with the Export-Import (Exim) Bank of China, its largest bilateral creditor, and the Official Creditor Committee (OCC) to restructure its debts.

By: Staff Writer

Colombo (LNW):The Government’s much publicized “digital” push is likely to be without home-grown Sri Lankan firms as they won’t be VAT exempted whilst foreign companies in the same field are let off due to the failure of the law.

Sri Lanka is ambitious in transforming the country’s economy and society through the full integration of digital technologies and be amongst the digital leader in the Asia – Pacific.

This involves ensuring that it can compete globally in areas such as innovation, entrepreneurship, and digital skills. It also includes promoting sustainability and inclusiveness in the digital economy to ensure that no one is left behind and that all citizens benefit from the opportunities provided by the digital revolution.

A National Digital Strategy for Sri Lanka will support the building of one of the three pillars identified for the new economy.

Through its implementation, the strategy shall accelerate Sri Lanka’s development trajectory towards becoming a developed country.

The apparent discriminatory regime for local e-commerce and digital services companies figured at a meeting of the Parliamentary oversight Committee on Public Finance (COPF) chaired by MP Dr. Harsha de Silva recently.

At the meeting, an advisor to the Inland Revenue Department confessed that come 1 January 2024, though local firms will be subject to the higher 18% VAT, due to the loophole in the over two-decade old law, transactions facilitated by foreign firms will be exempted.

He said that the VAT Act of 2002 only recognizes supply of goods and services by an entity or person physically present in Sri Lanka and the scope doesn’t include services locally offered by offshore companies.

A representative of Asia Internet Coalition (ACI) said via online at the COPF meeting the best practices in the region was taxing the consumption of goods or services locally. Representatives of Uber, PickMe were present at the COPF consultation.

Industry analysts expressed serious concern over the bizarre development. This in effect means, services of local digital economy firms for example PickMe will be 20.5% costlier than foreign owned Uber though registered in Sri Lanka is operated out of the Netherlands.

Same applies to Kapruka and other ecommerce portals which also compete with foreign firms operated platforms.

“Without amending or drafting a new Act these exemptions being removed is criminal. This creates a 20.5% cost disadvantage to all Sri Lankan domiciled businesses,” they said adding policy/law makers must address this immediately and ensure a level playing field will exist when these exemptions are removed.

Such a course would ensure a hyper competitive environment and make the industry more dynamic.

They warned that failure to address this serious anomaly and discrimination will create an unfair advantage to non-resident service providers.

By: Staff Writer

Colombo (LNW):State Minister of Finance Ranjith Siyambalapitiya yesterday admitted that the Ministry of Finance lacks a mechanism to identify internationally blacklisted companies that submit tenders to secure Government projects in Sri Lanka.

Responding to questions posed by Samagi Jana Balawegaya (SJB) MP Buddhika Pathirana on the tender granted to Madras Security Printers to print revenue stickers for bottles of alcohol, the State Minister said the company was chosen by the Cabinet Procurement Committee based on the Technical Committee Report.

The country is about to re-run a tender process for its national digital ID, after the company winning the first contract bid, Madras Security Printers (MSP), was disqualified. The first tender process was allegedly manipulated to favor MSP.

The Ministry also recently called for a tender to print 5 million national ID cards. Sri Lanka introduced fingerprint scans for passports with machine readable zones to support ICAO biometric comparisons back in 2015.

Despite now being revealed as an internationally blacklisted company in several countries, including Sudan, Kenya, and Liberia, for allegations and incidents of malpractice the State Minister said that Sri Lanka lacks a legal mechanism to probe into their backgrounds.

“This is why, on several occasions, including in Parliament, we emphasised the infiltration of liquor bottles with counterfeit revenue stickers into the Sri Lankan market. Unfortunately, our concerns were met with scepticism.

The question arises: How did counterfeit stickers end up in the possession of alcohol companies? It is either the Department of Excise or the printing company responsible for the stickers that must account for their distribution,” he pointed out.

The MP said however no action has been taken against the company or those responsible for the incident yet. “The Government must focus not on increasing taxes but rather collecting taxes due,” he noted.

In response, the State Minister of Finance said the Criminal Investigation Department has launched an investigation into the allegations while the officials of relevant agencies are being transferred every six months and spot checks are being carried out which has increased revenue since.

By: Staff Writer

Colombo (LNW):Sri Lanka hopes to double tourist arrivals to 1.5 million this year and bring in US $5 million in vital foreign exchange as the island nation seeks ways to tackle its worst financial crisis in seven decades, Tourism Minister Harin Fernado said.

In a promising start to December, Sri Lanka crossed the 1.3 million milestone welcoming a total of 57,394 tourists in the first 10 days. This is the highest tourist arrivals recorded post-pandemic.

With a target of 1.55 million tourists by the end of the year, Sri Lanka Tourism anticipates a robust month, aiming for a total of 242,135 arrivals.

Authorities express confidence in reaching the set target, hoping to attract an additional 184,741 tourists before the year concludes. The cumulative total as of 10 December was 1.33 million.

India (270,313), Russia (175,845) and the UK (116,814) emerged as the top source markets year to date (YTD) in 2023 so far.

During the first 10 days of December, India topped as the leading source market, contributing significantly with 11,442 arrivals, constituting 20% of the total. Following closely Russia accounts for 14% with 8,004 visitors, while the UK, Germany and China contribute 11%, 9%, and 5%, respectively.

On 10 December three cruise ships Vasco Da Gama, Mein Schiff 5 and MS Seven Seas Navigator were called at the port of Colombo with around 4,000 passengers from all three vessels.

Sri Lanka’s diverse attractions, coupled with marketing efforts, are seen as key factors driving this positive trend in tourism. As the year draws to a close, the industry remains optimistic about achieving its ambitious goals, marking a noteworthy recovery for Sri Lanka’s tourism sector.

Tourism earnings in the first 11 months of 2023 were over $ 1.79 billion, reflecting a 78.3% increase from the corresponding period of last year, whilst November earnings stood at $ 205.3 million, the latest Central Bank data released showed.

The authorities have set their sights on increasing arrivals to five million by 2029 and earning an impressive $ 21.6 billion within seven years.

As part of its long-term strategy to welcome five million visitors, it hopes to lift the average spending per visitor to $ 4,000, with 2.5 million of them spending over $ 500 per day, indicating a concentration on luring high-end tourists.

By: Staff Writer

Colombo (LNW): Sri Lanka, in the last three years, has spent a staggering Rs.4800 million on the import of Pinus wood, raising concerns as the country possesses ample commercial plantations capable of meeting its requirements for the next 18 years, a top committee reveals.

The Sectoral Oversight Committee on Environment, Natural Resources and Sustainable Development, headed by Samagi Jana Balawegaya (SJB) MP Ajith Mannapperuma, in its report presented to Parliament, says it called for a meeting with the officials of the State Timber Corporation to discuss it.

Sri Lanka has Pinus plantations covering over 16,000 hectares. Of them, 1,200 hectares are in the lands managed by the Department of Forest Conservation, 1,764 hectares by the Land Reforms Commission.

The high cost for logging and the shrinkage of Sri Lanka’s construction industry have reduced demand for Sri Lanka’s Pinus wood.

Mr. Mannapperuma said that his committee recommended the lowering of logging cost from Rs. 11.125 to Rs. 8,500 to create a competitive market for local Pinus food. He said the profit margin of State Timber Corporation was asked to be reduced by 25 percent.

Also, he said the committee asked for export of Pinus not as logs but as wood.“ When making wood, a lot of income generation opportunities are created in terms of transportation and milling,” he added.

Furthermore, it was revealed that pinewood worth 4.8bn rupees imported into Sri Lanka in the last 3 years. Chairman of the Committee inquired about importing Pine wood into Sri Lanka at a high cost while there is usable quality pine wood in the country.

The officials pointed out that there is a high demand for the imported wood due to its high quality and the very low amount of tax levied during importation, and that there is a low demand for local Pine wood due to the decrease in quality due to existing knots.

Also, the officials noted that although the local Pine wood is used only in the construction sector, the imported Pine wood is also used for the production of luxury furniture.

They also pointed out that since there is no good attitude among the public regarding local Pine wood, measures should be taken to encourage the use of local Pine wood for other activities including furniture production.

Accordingly, the committee informed the State Timber Corporation to submit an analysis report on the cost of imported Pine wood and the cost of domestic Pine wood production.