ECONOMYNEXT – Sri Lanka’s new economic programs necessitate the introduction of new legislation, its President Ranil Wickremesinghe has said.
“We are in the process of introducing a new law to replace the Port City Law, aimed at establishing an offshore economy. Given the unique nature of this economy, the existing laws of Sri Lanka may not be adequate, and thus, UK commercial laws will apply within the jurisdiction of the offshore economy,” Wickremesinghe was quoted as saying by his media division.
“The government has made significant strides, passing 42 laws in the past 14 months, a remarkable achievement. Now, the challenge lies in presenting the remaining 62 laws,” Wickremesinghe said in his keynote address at the ‘What’s New’ dialogue on Legal Reforms with young legal professionals yesterday (03) at the BMICH.
To effectively implement these laws, Wickremesinghe said, there was a need for a new group of lawyers who are well-versed in international legal standards. “It is essential to introduce laws that are globally accepted to foster the country’s development.” (Colombo/Mar4/2024)
The president’s speech:
“I refrain from detailing the factors contributing to the economic downturn in 2021-2022. However, the underlying issue stems from our prolonged reliance on debt. Our failure to effectively manage this debt led to the collapse of our country, as we found ourselves unable to meet our financial obligations due to a lack of income.
This predicament is not new and predates the tenure of former President Gotabaya Rajapaksa. The trend of borrowing began earlier, and unlike other nations, our loans were often allocated to non-tradable goods. Our reliance on the construction sector primarily focused on highways, limited our ability to derive significant benefits. Despite this, initiatives like the Mahaweli project facilitated the provision of electricity and fostered agricultural development.
It’s crucial for everyone to acknowledge their role in the challenges our country faces; no one is exempt from responsibility. Moving forward, we must collectively address our inability to meet debt obligations. Negotiations are underway to secure a grace period until 2026-2027 for repayment. Additionally, various other measures are being explored to navigate our financial challenges.
In 2022, government revenue accounted for 8.3% of the gross domestic product (GDP). By 2023, we managed to increase it to 10.9%, yet our GDP remained stagnant, showing a decrease of 2%. However, we aim to boost government revenue to 13.1% this year, which should subsequently bolster our GDP. By 2028, we anticipate raising it further to 15.2%, representing a remarkable 175% increase from the initial 8.3%.
In a significant milestone, our primary budget achieved a surplus of 6.7% in 2023, a trend we aim to sustain at 2.3%. Conversely, the budget deficit stood at 10.2% in 2022, a figure we intend to reduce to 3.9% by 2028. Achieving these targets poses significant challenges, but they are essential for our financial stability.
As of 2022, our debt stands at 128% of GDP. By 2032, our goal is to reduce it to 95% of the GDP. We borrowed 35% of GDP by 2022, which we aim to lower to 13% in the coming years. These endeavours are vital for ensuring a sustainable economic future for our nation.
This is the necessary course of action. How do we proceed? The transformation of the country’s economy is imperative. We must transition from a domestic economy to one focused on exports. Currently, we lack the foreign exchange needed for imports. Therefore, shifting to a competitive export-driven economy is essential. Simultaneously, we should embrace a digital and sustainable green economy.
To establish this new economic paradigm, we require new legislation. The European trade system was established during the Dutch colonial period, and elements of the Roman-Dutch legal system still influence our laws today. In 1835, with the arrival of colonial powers, a new phase of economic openness began, accompanied by the introduction of new legal frameworks. Subsequently, the government elected in 1970 implemented a socialist-controlled economy, prompting the enactment of corresponding laws.
In 1977, President J.R. Jayawardena ushered in the open economy era, necessitating the introduction of new legislation. Similarly, for this new economic program, we need to enact pertinent laws.
The government has made significant strides, passing 42 laws in the past 14 months, a remarkable achievement. Now, the challenge lies in presenting the remaining 62 laws. Postponing the parliamentary vote is not an option. Any unfinished business will be carried forward to the next parliament. If we persist with this program, a new legal framework will emerge in the coming years, paving the way for a revitalized economy.
We are in the process of introducing a new law to replace the Port City Law, aimed at establishing an offshore economy. Given the unique nature of this economy, the existing laws of Sri Lanka may not be adequate, and thus, UK commercial laws will apply within the jurisdiction of the offshore economy.
To effectively implement these laws, we recognize the need for a new group of lawyers who are well-versed in international legal standards. It is essential to introduce laws that are globally accepted to foster the country’s development.
Furthermore, we are restructuring government institutions engaged in commercial activities. All government corporations will be reorganized into companies, with their shares consolidated under a central entity. This restructuring aligns with commercial principles and imposes responsibilities akin to those of directors of public companies under the Companies Act. Sanctions can be imposed for any errors made. Additionally, we aim to introduce legislation concerning public-private joint ventures to further facilitate economic progress.
A new Public Financial Management Act is set to be introduced, along with a Public Debt Management Act and an Agriculture Modernization Act, all aimed at achieving specific economic goals. Additionally, an Economic Transformation Act will be enacted to spearhead these objectives, potentially leading to the establishment of an Economic Commission in lieu of the current Board Of Investment.
Furthermore, control over trade zones under the Board of Investment and newly established trade zones will be consolidated under this commission. To bolster domestic productivity, a National Productivity Commission will be established, recognizing the imperative of enhancing local products to remain competitive globally. Simultaneously, the establishment of an Economic and International Trade Institute is underway to further support economic growth. To streamline the legislative process, these initiatives will be presented collectively to the Supreme Court, avoiding the need for separate submissions over time.
Furthermore, legislative efforts will encompass the introduction of a new law governing tourism businesses, as well as the transfer of government property management responsibilities. Additional legislation addressing climate change and environmental conservation is also on the agenda, with a focus on safeguarding vital natural reserves such as Sinharaja, Sripada, Horton Plains, and Wasgamuwa Parks.
Moreover, structural reforms will involve the dissolution of the Department of Commerce, paving the way for the establishment of new international trade centres. These centres will operate in tandem with the Ministry of Foreign Affairs, signalling a concerted effort to revitalize and optimize Sri Lanka’s trade landscape.
Additionally, we are actively pursuing the implementation of new legislation in the education sector. Efforts are underway to consolidate vocational education under a single authority and to establish new technical universities. Likewise, attention is being directed towards reforms in the healthcare sector.
The Education Act of 1944, while historically significant, no longer aligns with the needs and aspirations of our modern society. It is imperative that we enact new laws to usher in a new era of progress and prosperity for Sri Lanka. Our goal is to encourage a society and economy that is resilient and equipped to navigate future challenges effectively.
The decisions we make today will shape the future of our nation. Despite facing considerable challenges, we have made significant strides in revitalizing our country within a remarkably short span of time. By April and May, we anticipate legally resolving the bankruptcy that has plagued our nation. However, it is essential that we honour our financial obligations and fulfil our loan repayment agreements.
The legislative process involves presenting proposed laws to Parliament for consideration. Following parliamentary approval, these laws undergo scrutiny by the Supreme Court before being enacted. Despite some opposition, it is crucial to uphold the integrity of our legal system and safeguard the authority of Parliament. Any attempts to undermine the law or restrict parliamentary powers through dubious interpretations must be resisted.
The authority of the Parliament in our country is founded on the 1972 Constitution, replacing the previous British constitutional framework. Legal precedents such as the cases of Ranasinghe against the Bribery Commissioner and Liyanage against the Queen are considered immutable within this jurisdiction. As a result, in 1970, the government was mandated to establish a legislative body and draft a new constitution. Colvin R. de Silva played a significant role in this process, advocating for the exercise of popular sovereignty through the National Assembly.
Under this arrangement, Parliament wielded executive authority, and the Cabinet was held accountable to Parliament. Additionally, both legislative and judicial powers were vested in Parliament, enabling it to carry out the functions traditionally performed by the courts.
In 1977, Colvin R. de Silva played a significant role in the development of the legal framework. He emphasized the alignment of legal practices with English law principles during this period.
The introduction of the executive presidential system in the 1977 constitution marked a significant change in the governance structure. This shift transferred the executive power of the people to a president. While other aspects remained unchanged, such as universal suffrage and the role of parliament, fundamental rights were also incorporated into the constitution. The responsibility for enacting and upholding these provisions rested with the Parliament.
When the President appoints the Cabinet, their accountability to Parliament remains unchanged. Thus, the power now resides within Parliament, as outlined in the constitution, where Parliament’s authority, fundamental powers, and universal suffrage take precedence. As President, I currently hold executive powers, which can be repealed by Parliament, but the powers of Parliament itself cannot be abolished.
During Mr. Colvin R. De Silva’s tenure in Parliament, the emphasis was on socialism, while Mr. Jayawardena introduced the open economy. Similarly, we are committed to advancing along this trajectory. Both Mr. Colvin R. De Silva and Mr. Jayawardena, who were classmates at Royal College, shared a similar mind-set, recognizing the primacy of parliamentary sovereignty.
Hence, we must proceed in accordance with UK law. Any attempts to impede these efforts can be brought before Parliament for scrutiny by its legislative and judicial branches. These endeavours cannot be obstructed, as it is imperative to prevent further suffering among the population.
In terms of human rights, the foremost right is the preservation of living, followed by securing a promising future for the youth. All other considerations come thereafter. Engage in whatever political endeavours you see fit. However, the imperative for transformation cannot be overstated. Without it, our nation’s future is at stake. This is why I urge your active involvement and contribution.”