By: Staff Writer

Colombo (LNW): The deficit in the merchandise trade account narrowed to US dollars 390 million in November 2023, compared to the deficit of US dollars 449 million recorded in November 2022 as well as US dollars 683million recorded in October 2023.

In the meantime, the cumulative deficit in the trade account during January to November 2023 narrowed to US dollars 4,414 million from US dollars 4,827 million recorded over the same period in 2022.

Earnings from merchandise exports recorded a year-on-year marginal increase in November 2023 for the first time since September 2022.

Accordingly, earnings improved by 0.4 per cent to US dollars 999 million in November 2023, over November 2022 as well as over US dollars 928 million in October 2023.

An increase in earnings was observed in agricultural exports and mineral exports, while a decline was recorded in industrial exports.

Cumulative export earnings recorded a decline of 9.4 per cent during January to November 2023 to US dollars 10,909 million, over the same period in the last year.

Earnings from the exports of industrial goods declined in November 2023, with a significant share of the decline being contributed by garments. Accordingly, exports of garments to most of the major markets (the USA, the EU, and the UK) recorded declines.

However, earnings from garment exports improved notably in November 2023, compared to October 2023.

Earnings from the exports of agricultural goods improved in November 2023, compared to a year ago, led by tea (mainly, instant tea) exports.

An increase of earnings from overall tea exports resulted from the higher export volumes although the unit price of tea exportsin November 2023 was lower than a year earlier. Further, export earnings from coconut related products (mainly, fibres and coconut oil) and spices (mainly, cinnamon) increased due to higher export volumes.

Meanwhile, there was a decline in export earnings from minor agricultural products (primarily, areca nuts), natural rubber, and vegetables.

Expenditure on merchandise imports declined by 3.9 per cent (year-on-year) to USdollars 1,389 million in November 2023, compared to US dollars 1,445 million in November 2022and US dollars 1,610 million in October 2023. A decline in import expenditure was observed in intermediate goods, mainly resulting from lower expenditure on fuel imports.

However, an increase was recorded in imports of investment goods and consumer goods partly due to relaxation of import restrictions. Meanwhile, cumulative import expenditure during January to November 2023 declined by 9.1 per cent to US dollars 15,323 million over the corresponding period in the last year.

Expenditure on the importation of consumer goods increased in November 2023, compared to a year ago, mainly due to the increase in expenditure on non-food consumer goods.

By: Staff Writer

Colombo (LNW): While most of the blundering tax cuts imposed by the previous Gotabaya Rajapksa regime have now been fully or partly reversed, more fundamental changes in the tax policy process will be necessary to secure sustained revenue, dinance ministry sources claimed

Sri Lanka’s tax system has been suffering from constant change, driven by shifting beliefs about potential prospects of certain business sectors or taxpayers, leading to a multitude of sector and taxpayer-specific exemptions Policy makers have introduced repeated tax amnesties

The present government implemented an aggressive upward adjustment of the personnel income tax personnel income tax PIT rate schedule and eliminated many sectoral incentives under the CIT in 2021 by amending the law.

Sri Lanka’s pay as you earn tax files had increased to 242,679 in 2023, from 41,636, Commissioner at the Department of Inland Revenue A M Nafir has said.

At total 500,196 persons were registered as individual tax-payers by end November 2023, up from 204,467,

Partnerships registered for tax had gone up to 15,579 from 13,776.The number of companies registered had increased to 81,909 from 73,444.

“In 2019, IRD revenue was 1,025 billion, in 2020 it decreased to 500 billion. This year it was possible to raise it to 1,500 billion by widening the tax base and by changing tax rates,” Nafir was quoted as saying.

“From next month, all persons above 18 years of age have to be registered with the IRD and obtain a Taxpayer Identification Number (TIN).”

“Do not misunderstand this: Getting the number and opening tax files are two things. It’s like having an NIC number. They have to pay income tax only if there is income

Sri Lanka is expecting 1,400 billion rupees from Value Added Tax in 2024, after broadening the base and raising the rate, Director of the state revenue unit of the President’s Office K K I Eranda has said.

Though 600 billion rupees was expected from VAT in 2023 only about 450 billion had been collected so far,.

Due to exemptions given in the past, there is leakage of taxes and the government was forced to broaden the base, he said.

Sri Lanka’s economic bureaucrats in December 2019 cut rates and taxes to target a potential output, triggering worst external crisis than in 2015 and 2018.

The VAT threshold which was at 15 million rupees a year was raised to 300 resulting in large numbers of payers dropping.

It was reduced to 80 million as part of efforts to raise taxes after the default and will be reduced to 60 million from January.

The Deputy Director of Economic Research at the central bank, Janaka Edirisinghe said in many countries VAT revenues were 6 to 8 percent of GDP.

In 2024 VAT revenues are targeted to increase to 4 percent of GDP. However, it was also below the optimal level, he said.

This year VAT was estimated to be only 2.2 percent of GDP. Sri Lanka will remove a Ports and Airports Levy, a type of backdoor border tax on many of the items coming under 18 percent value added tax, Tax Advisor to the Finance Ministry Thanuja Perera has said.

By: Staff Writer

Colombo (LNW): The new Indian High Commissioner to Sri Lanka said he would engage in discussions with the Indian government to promptly implement a proposal regarding the initiation of a passenger ferry service linking all ports of Sri Lanka to India.

These assurances were made during a crucial meeting held on December 28, 2023, with the Minister of Ports, Shipping, and Aviation, Nimal Siripala de Silva.

The discussions at the Ministry were comprehensive, covering the progress of various strategic projects, including the Palali airport and ports in Kankesanthurai, Talaimannar, and Trincomalee.

The new Indian High Commissioner also emphasized the Indian Government’s commitment to advancing the maritime and aviation sectors, as well as contributing to the development of the northern region of Sri Lanka.

Minister de Silva underscored the Sri Lankan government’s readiness to facilitate opportunities for Indian investors interested in engaging with the maritime and aviation services sectors. Notably, he highlighted investment prospects in the Trincomalee Port area, emphasizing the potential for ship and small craft building industries.

Furthermore, he assured that Indian technology and investors would be made available to support the commencement of several renewable energy projects in Sri Lanka.

Highlighting the collaborative efforts between Indian Prime Minister Narendra Modi and Sri Lankan President Ranil Wickramasinghe, High Commissioner Jha underscored the diplomatic synergy aimed at fostering regional development and cooperation.

The proposed passenger ferry service aligns with the shared vision of both leaders to strengthen ties and promote economic growth between India and Sri Lanka.

The much awaited passenger ferry service linking India’s Nagapattinam and Sri Lanka’s Kankesanthurai commenced operations on 14 October.

The ferry was flagged-off from Nagapattinam by the Indian Ports, Shipping and Waterways Minister Shri Sarbananda Sonowal at the port, and the External Affairs Minister Dr. S. Jaishankar through video link.

The ceremony was addressed by the Indian Prime Minister Narendra Modi and President Ranil Wickremesinghe virtually. The Ports, Shipping and Aviation Minister of the Government of Sri Lanka Nimal Siripala de Silva also joined the event virtually.

In his address, Prime Minister Modi recalled the vision document jointly adopted during the visit of the President of Sri Lanka to India in July 2023 for economic partnership between India and Sri Lanka, with the central theme of connectivity.

He highlighted that connectivity brings closer the two countries and its people.

Recalling the recent launch of the India-Middle East-Europe Economic Corridor during the G20 summit in India in September 2023, the Prime Minister mentioned that the people of Sri Lanka will benefit from this connectivity corridor, as multimodal connectivity between India and Sri Lanka is strengthened.

He further said that both Governments are working on fin-tech connectivity by linking UPI and Lanka Pay, and for connecting the energy grids to enhance energy security.

Colombo (LNW): The December 2023 headline inflation gauged by the year-on-year (Y-o-Y) alteration in the Colombo Consumer Price Index (CCPI, 2021=100) recorded a rise to 4.0 per cent, up from 3.4 per cent in November 2023.

This escalation in headline inflation aligns closely with the forecasts made by the Central Bank of Sri Lanka (CBSL) in November 2023.

After five months of continuous deflation, the Food category recorded inflation (Y-o-Y) of 0.3 per cent in December 2023 from 3.6 per cent deflation (Y-o-Y) recorded in November 2023, the report added.

Meanwhile, the Non-Food inflation (Y-o-Y) declined to 5.8 per cent in December 2023 from 6.8 per cent in November 2023.

Monthly change of CCPI recorded 0.89 per cent in December 2023 due to the combined effect of price increases of 1.16 per cent observed in items of Food category and price decreases of 0.27 per cent observed in the items of Non-Food category.

The core inflation (Y-o-Y), which reflects the underlying inflation in the economy, decreased to 0.6 per cent in December 2023 from 0.8 per cent in November 2023.

Full Report: https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20231229_inflation_in_december_2023_ccpi_e.pdf