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Without upped tax revenue, country can revert to era of queues

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The Government is ready to implement prudent economic management after successful debt restructuring, emphasized President Ranil Wickremesinghe, when he delivered a special statement on tax policy today (19).

President Wickremesinghe further noted that it was not possible to strengthen the economy without increasing the revenue of the country, which will compel him to reluctantly make tough decisions in order to rebuild the nation.

The full statement by President Ranil Wickremesinghe is as follows;

An important step in Sri Lanka’s debt restructuring program took place last week. A team under the Minister of State for Finance participated in the Annual (October 07) meeting of the International Monetary Fund (IMF). In that instance, a meeting was convened by the IMF, with the lending and international private institutions to Sri Lanka.

Over 75 persons participated both in person and  through zoom technology. The main objective of this meeting was for the three main countries that have granted loans to Sri Lanka, namely Japan, China and India, to come together on a common platform to discuss the future steps in the formulation of concessions.

During this meeting, the IMF and Sri Lanka pointed out the need for a common platform. India and China have informed that they will examine the issues further and respond accordingly.  These two countries have also informed the possible need for bilateral discussions in this regard.

Many other countries also participated in this meeting, including the attendance of an Assistant Secretary of the United States Treasury. All this was possible due to the implementation of the decisions taken in consultation with the IMF.

There is an aspect about the income of the Government of Sri Lanka which need to be noted. In 2015, during a visit to Sri Lanka the IMF representatives  underlined the need or a surplus in the primary budget. Therefore, it was provided for in 2017-2018. However, it was reduced in 2019 due to the Easter Sunday bombings. However, there were no serious repercussions. The IMF was  optimistic that Sri Lanka would be able to increase its revenue, since there was a surplus in the primary budget.

At that juncture, Sri Lanka’s income was between 14.5% – 15% of the Gross Domestic Product (GDP). However, it was agreed that Sri Lanka could gradually increase this to 17%-18%.
However, in November 2019, the country’s taxes were drastically reduced, with the Government revenue decreasing to 8.5%. In this context, the IMF set aside the agreements and declared that it was unable to provide the agreed assistance. 

That year the Government lost approximately Rs. 600-700 billion as revenue.  Simultaneously, the country  had to face the Covid-19 pandemic. These issues are the main factors that led to the collapse of Sri Lanka’s economy.

The IMF advised the need for  a surplus in Sri Lanka’s  primary budget. It was agreed to, since the country needs the support of the IMF.

It was also decided to increase the country’s income from 8.5% to 14.5% of the GDP. However, it is a difficult task to accomplish immediately, it is envisaged to achieve this  by 2026.

Initially, a decision had to be taken on the manner in which the income is to be increased. Money was printed due to the decrease in income. During the past two years, Rs. 2300 billion has been printed, resulting in inflation rising to 70% – 75% and even more in respect of food inflation.

These increases need to be controlled, while securing income. Therefore, during the discussions with the IMF a new tax system has been proposed. The IMF informed that even the export industries would be required to pay taxes.

The IMF pointed out that in countries with an export economy, the related industries were liable for tax. The IMF also upheld that Sri Lanka’s primary export economy is based on the plantation industry. During British rule, taxes were charged from every plantation sector, including tea, coconut and rubber. Therefore, if the country has to move towards that goal, taxes will have to be paid. The export sector has now questioned this aspect and the related concerns are to be submitted to the IMF.

The second issue regarding the personal tax structure.  The majority of tax revenue is through indirect taxation. The majority of the country’s citizens, even those below the poverty line, had no choice but to pay indirect taxes.  The direct tax revenue is 20% and 80% has been derived from indirect taxes.

The IMF that particularly had reservations in this regard were of the view that the amount of tax obtained through direct taxes should exceed 20%. The IMF noted that otherwise this would not be successful and ordinary citizens would need to pay taxes.

Therefore, according to this framework, and also to achieve the goals of 2026, the Treasury and the IMF discussed the possibility of limiting the taxation from those who have an income of Rs. 200,000, which however, did not materialize.  Eventually, this has resulted in the decision to levy income tax on people earning over 100,000. Today, this has become a vital concern amongst the citizens.

Against this backdrop, without this tax system, the desired goal will not be achieved. The agreed goal is to achieve 14.5% – 15% of Gross Domestic Product (GDP) revenue by 2026.

 If Sri Lanka withdraws from this program, IMF assistance will not be received. Without IMF certification, the support of these international financial institutions such as the World Bank,  Asian Development Bank, and the countries that have supported financially will not be forthcoming. If that happens, the country will be  back to the era of queues.

Tougher times ahead will have to be faced. Therefore, these loans need to be obtained and embark on a debt-restructuring program. These decisions are not being taken wilfully, but are being done  reluctantly. However, these decisions will be reconsidered periodically.

In the same manner of conducting the debt restructuring program successfully, if a bountiful Maha season is achieved as expected, it will help in reducing economic pressure. Measures  to increase the country’s foreign reserves has also been discussed and once all these steps have been implemented the country can move forward.

The country at this juncture is facing a difficult period. Expectedly tough decisions have to be taken during these difficult times. I undertook this challenge when no one else was willing to come forward. Therefore, it is my responsibility to explain the background of the related issues and the Government is also ready to discuss this further if required.

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2nd phase of bidding for luxury vehicles from Prez Secretariat commences

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The second phase of bidding has commenced for the sale of 27 luxury and decommissioned vehicles from the Presidential Secretariat.

 These vehicles, manufactured between 1991 and 2016, include a range of high-end and utility models: two BMW cars, two Ford Everest SUVs, one Hyundai Terracan SUV, two Land Rover SUVs, one Mitsubishi Montero, three Nissan petrol cars, two Nissan-type motor cars, one Porsche Cayenne, five SsangYong Rexton SUVs, one Land Cruiser Sahara SUV, six V08 vehicles and one Mitsubishi Rosa air-conditioned bus.

Tender documents are available from the Finance Division, located on the second floor of the Sema Building at the Presidential Secretariat, on working days between 9:00 a.m. and 3:00 p.m. until 14th May. Interested parties may also inspect the vehicles at the Salusala premises, No. 93, Jawatta Road, up to the same date.

This auction follows the successful first phase of the programme, during which 14 luxury vehicles, six decommissioned vehicles and various spare parts were sold. That phase included the auction of 15 vehicles, including nine Defender Jeeps. The initiative reflects the government’s ongoing commitment to reducing public expenditure and ensuring fiscal discipline.

It is important to note that the vehicles on offer were not allocated to the permanent staff of the Presidential Secretariat. They were utilised by advisors and other individuals appointed under Article 41(1) of the Constitution during the tenure of the previous President.

The official notice regarding this auction is shown below :

(President’s Media Division)

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IPL suspended for a week over safety concerns

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The Indian Premier League has been suspended for one week amid the ongoing tensions between India and neighbouring Pakistan.

Overnight, India accused Pakistan of attacking three of its military bases with drones and missiles, a claim which Islamabad denied.

Pakistani authorities say 31 people have been killed and 57 injured by Indian air strikes in the country and Pakistan-administered Kashmir since Wednesday morning.

Twenty-six civilians were killed in Indian-administered Kashmir last month and India has accused Pakistan of supporting militants behind the attack – an allegation the neighbouring country has rejected.

The situation escalated on Tuesday evening when India launched a series of strikes in a move named “Operation Sindoor”.

The Board of Control for Cricket in India (BCCI) said: “The decision was taken by the IPL Governing Council after due consultation with all key stakeholders following the representations from most of the franchisees, who conveyed the concern and sentiments of their players, and also the views of the broadcaster, sponsors and fans.

“While the BCCI reposes full faith in the strength and preparedness of our armed forces, the Board considered it prudent to act in the collective interest of all stakeholders.”

On Thursday, the IPL match between Punjab Kings and Delhi Capitals in Dharamsala was abandoned mid-match because of floodlight failure, with players, staff and media set to be evacuated from the city, which lies close to the contested region of Kashmir.

Later on the same day, the remaining matches in the Pakistan Super League were moved to the United Arab Emirates.

The IPL, the richest franchise T20 league in the world, had been set to run until 23 May, with 16 games left to be played.

“Further updates regarding the new schedule and venues of the tournament will be announced in due course after a comprehensive assessment of the situation in consultation with relevant authorities and stakeholders,” said the BCCI.

There are 10 England players – past and present – involved in this year’s tournament. They include former white-ball captain Jos Buttler, fast bowler Jofra Archer and all-rounder Jacob Bethell.

IPL matches have been staged outside India before, with the 2009 edition held in South Africa following an attack on the Sri Lankan national side in Lahore in Pakistan, while the 2020 and second half of the 2021 seasons were staged in the United Arab Emirates during the Covid-19 pandemic.

(BBC News)

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First capacity-building program under NCGG – SLIDA MoU concludes successfully

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A Memorandum of Understanding (MoU) between the National Centre for Good Governance of India (NCGG) and Sri Lanka Institute of Development Administration (SLIDA) was signed during the State Visit of President of Sri Lanka, H.E. Anura Kumara Disanayaka to India in December 2024 for training and capacity building of 1500 Sri Lankan civil service officers over a period of five years.

The first program under the MoU was successfully held at NCGG from 21 April to 02 May 2025, and was attended by 41 officers. Based on the request of the Government of Sri Lanka, the theme of the program was ‘digitization in governance’. The program featured a series of sessions focused on key areas such as digital service delivery, digital public infrastructure, financial inclusion through digital payments, and innovations in public grievance redressal systems. Senior officials and domain experts delivered presentations on flagship Indian initiatives in the digital domain, including Ayushman Bharat Digital Mission, e-Office, GeM, Aadhaar, PM Gati Shakti, among others.

At an interaction session with participants in the inaugural program organized on 08 May 2025 at SLIDA, the High Commissioner of India to Sri Lanka, H.E. Santosh Jha underscored that capacity building is an important pillar of the development cooperation between the two countries, with Sri Lanka being among the largest recipients of scholarships and capacity building initiatives offered by India. He highlighted that, demonstrating India’s continued commitment to enhancing capacity-building opportunities for Sri Lankans, Prime Minister of India had announced additional training avenues to 700 Sri Lankan citizens annually during his recent State visit. In that context, the High Commissioner said that the participants in the first NCGG-SLIDA programme also represented the first set of Sri Lankan nationals to receive training as part of the significantly enhanced capacity-building endeavour of India that will now benefit 1000 Sri Lankans annually.

The interaction session was also attended by Secretary, Ministry of Public Administration, Provincial Councils and Local Government, Mr S. Aloka Bandara; Director General of SLIDA, Mr A.V. Janadara; senior officials and faculty members of SLIDA; among others.

In view of the highly positive feedback from the participants in the inaugural NCGG-SLIDA program, based on request from SLIDA, a second program on the same theme under the MoU is now being planned for another batch of around 40 officers for early June 2025.

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