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VAT hike required to fund salary increase demanded by striking govt. employees

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Secretary to the Treasury Mr. Mahinda Siriwardana stated that granting the salary increase demanded by striking public servants would necessitate raising the current VAT from 18% to between 20% and 21%.

He emphasized that the government cannot impose such a burden on the public. Mr. Siriwardana made these remarks during a discussion held today (08) at the Presidential Secretariat, chaired by President Ranil Wickremesinghe, concerning the demands of public service trade unions.

The discussion addressed the trade union actions taken by several trade unions in the public service and explored potential positive solutions to their demands. It was noted that while a salary increase is not feasible this year, there is a plan to revise public service salaries in the 2025 budget, based on recommendations from an expert committee investigating salary disparities.

The Treasury Secretary highlighted that a salary increase of Rs. 10,000 for government employees would require an additional Rs. 140 billion annually, and an increase of Rs. 20,000 would necessitate an additional Rs. 280 billion.

To generate the required income, even with optimal management of current revenues, additional tax increases will be necessary, the Treasury Secretary pointed out. Specifically, he noted that to raise salaries by Rs. 10,000, the VAT would need to be increased by 2%. 

Furthermore, to meet the wage demands of the trade unions, the VAT would need to be raised by more than 3%. He emphasized that this is not feasible at this time, as the VAT is already at a maximum rate of 18%.

The Treasury Secretary also explained that, due to the government’s efforts to stabilize the country’s economy, the Central Bank can no longer print money as it did before. Doing so would jeopardize the program with the International Monetary Fund.

Senior Advisor to the President on Economic Affairs, Dr. R.H.S. Samaratunga, remarked that while increasing public servants’ salaries again this year is challenging, the President has committed to allocating funds for this in next year’s budget. He also mentioned that a separate expert committee has been appointed to study and report on salary discrepancies.

The discussion included President’s Secretary Mr. Saman Ekanayake and a group of senior government officials.

(President’s Media Division)

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President AKD meets visiting IMF Dy. Managing Director

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President Anura Kumara Disanayake met with the Deputy Managing Director of the International Monetary Fund (IMF), Ms. Gita Gopinath, and the delegation this morning (June 16) at the Presidential Secretariat.

During the meeting, President Disanayake expressed his sincere appreciation to the IMF for its continued support in guiding Sri Lanka through its recent financial crisis. He also raised concerns regarding the recently imposed U.S. tariffs, noting their potential impact, as approximately 25% of Sri Lanka’s total exports are directed to the United States. The President further highlighted the challenges posed by on-going global conflicts and their potential implications for Sri Lanka. However, he mentioned to the delegation that appropriate measures are being taken to manage and mitigate these risks effectively.

The discussion also focused on Sri Lanka’s trade relationship with the European Union, particularly the GSP+ trade concession, which accounts for 23% of the country’s exports and provides preferential access to the EU market. The President emphasized the current government’s interest in expanding investment opportunities, stating that economic recovery would be driven through increased investor confidence. He reiterated that the current administration is people-oriented and committed to advancing in close alignment with public aspirations.

Ms. Gopinath thanked the President for the warm welcome and acknowledged the strong mandate he received in both the general and local elections, which she noted enhances the government’s ability to implement much-needed reforms. Reflecting on the country’s economic journey, she commended the remarkable progress achieved over the past two years from a state of severe crisis to renewed growth and falling inflation.

She also praised the strides made in governance reforms and emphasized the importance of sustaining and deepening these efforts. The IMF delegation reaffirmed its recognition of Sri Lanka’s substantial progress and pledged to remain a steadfast partner in the country’s reform and recovery process.

Also present at the meeting were Minister of Labour and Deputy Minister of Economic Development Dr. Anil Jayantha Fernando, Governor of the Central Bank Dr. Nandalal Weerasinghe, Secretary to the President Dr. Nandika Sanath Kumanayake, Secretary to the Ministry of Finance Mr. Mahinda Siriwardana, Senior Economic Advisor to the President Duminda Hulangamuwa and Senior Additional Secretaries to the President Russell Aponsu.(President’s Media Division)

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Sri Lankan youth injured in Iranian missile strike in Israel

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A Sri Lankan youth has sustained injuries following an Iranian missile attack in the Bnei Brak area of Israel, according to Sri Lankan Ambassador to Israel, Nimal Bandara.

The injured individual has been identified as Vimukthi Madhusanka, a resident of Akuressa, who had traveled to Israel for construction-related employment.

In a statement posted on his official Facebook page, Ambassador Bandara confirmed that arrangements are underway to ensure medical treatment for Madhusanka.

He further stated that embassy officials are actively monitoring the situation and urged any other Sri Lankans affected by the conflict to contact the embassy without delay.

(dailynews.lk)

(Except for the headline, this story, originally published by dailynews.lk has not been edited by SLM staff)

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Vraie Cally Balthazaar elected Colombo Mayor

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National People’s Power (NPP)’s Vraie Cally Balthazaarhas been elected as the new Mayor of the Colombo Municipal Council.

Following a closely contested secret ballot today (June 16),  Balthazaar secured 61 votes, narrowly defeating Riza Zarook of the Samagi Jana Balawegaya (SJB), who received 54 votes.

The ballot was held since no single party obtained a clear majority at the recently concluded Local Government polls.

Meanwhile, Hemantha Kumara of the National People’s Power (NPP) was proposed as the Deputy Mayor of the Colombo Municipal Council and was elected unopposed.

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