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Monday December 5th, 2022

Sri Lanka built on loans, not tax revenue: Industries Minister

ECONOMYNEXT –  Sri Lanka is built on loans and not on tax revenue, and social reform should come from all sectors, Industries Minister Ramesh Pathirana said.

Minister Pathirana addressing parliament on Friday August 12 said Sri Lanka has developed significantly in academics and infrastructure, but the country has been built on loans and not by income earned through taxation.

“In 1948, only 10 percent of the households had electricity and now 99 percent of households have power while electricity capacity has increased to 4,293 MW,” said Pathirana.

“We have increased the number of schools to 10,155 from 3,091. Primary school enrolment has increased to 98 percent from 52 percent,” he said.

Immediately after Independence from the British, the minister said, Sri Lanka was on its way to being a developed nation, with Malaysia the only country ahead of Si Lanka in the region.

“As a country that is still preoccupied with caste, religion and race, we have achieved a lot in this time,” Pathirana said.

“But we did it by taking loans, not through tax income,” he said.

“We have an issue now in repaying those loans, because during [ex President] Gotabaya Rajapaksa’s government, we decided not to take any more loans.”

This decision has now proved an obstacle, said Pathirana, due to the pandemic.

“That responsibility should be taken by us,” he said.

Only around 1,000 people have paid more than one million in tax and only around a total of 31,000 out of 246,000 income taxpayers have paid taxes in 2021, said the minister.

In what appeared to be a hint of what to expect from the coming interim budget, Pathirana said  tax reforms can be bitter for taxpayers in the future.

“We have to go for these reforms due to the situation of the country,” he said.

He further said social reform in order to develop the country should come from all people in every sector of the country.

“Even though our number of schools have increased, it doesn’t matter if more than 1.1 million students have become three wheel drivers,” he said.

“It doesn’t matter how many buildings we have built if we are not teaching these children English. It doesn’t matter if there is no technical knowledge is given.”

Pathirana said, not only politicians, but officials  implementing the decisions should also take responsibility for social development.

“We have 40,000 graduates every year. If most of them become jobless with degrees, then education officers should take the responsibility for not giving them the proper skills for the job market,” said Pathirana.

“The change should come from every person and should not just be expected from politicians,” he said. (Colombo/Aug12/2022)

Comments (2)

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  1. Dayan says:

    Not only built but robbed too on loans.

  2. DGee says:

    Building up on loans is acceptable provided there is regular revenue adequate to repay loan and save a further amount for other needs. But what did regimes in last 20 years do.

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Your email address will not be published. Required fields are marked *

  1. Dayan says:

    Not only built but robbed too on loans.

  2. DGee says:

    Building up on loans is acceptable provided there is regular revenue adequate to repay loan and save a further amount for other needs. But what did regimes in last 20 years do.

Sri Lanka’s shares gain in mid market trade

ECONOMYNEXT – Sri Lanka’s shares edged up in mid day trade on Monday (05), continuing the positive run for seven straight sessions on news over a possible debt restructuring from Paris Club, analysts said.

All Share Price Index gained by 0.69% or 60.10 points to 8,829, while the most liquid shares gained by 0.96% or 26.59 points to 2,801.

“The market was pushed up over the news of a potential 10 year debt moratorium,” analysts said.

The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis. 

Related – Paris Club proposes 10-year moratorium in 15-year Sri Lanka debt re-structure: report

The market generated a revenue of 2.1 billion rupees.

Top gainers during 1130 hours were Expolanka, Browns Investment and LOLC.  (Colombo/Dec05/2022)

 

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Sri Lanka bond yields slightly down

ECONOMYNEXT – Sri Lanka’s bond yields were slightly down at open on Monday while t- bills were inactive, dealers said.

The Central Bank’s guidance peg for interbank transactions was at 363.18 rupees against the US dollar, appreciated from 363.19 rupees on Friday.

“Only one bond is being quoted today, and the rest remaining unquoted” a dealer said.

A bond maturing on 15.05.2026 quoted at 29.30/30.00 percent down from 29.50/75 percent at Friday’s close.(Colombo/ Dec 03/2022)

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Sri Lanka should prioritize RCEP , not small FTAs: economist

ECONOMYNEXT – Sri Lanka should make joining the Regional Comprehensive Economic Partnership (RCEP) a priority instead of trying to negotiate multiple smaller deals, an economist has said.

“We do not have the bandwidth in government and the technical resources to do multiple trade agreements,” Anushka Wijesinghe an economist who has been involved in trade told a business forum in Colombo.

“I think RCEP should be number one priority, rather than three or four tiny bilateral goods agreements.”

Sri Lanka is trying negotiate a free trade deal with China and expand an existing one with India.

Data show that Sri Lanka has been able to boost exports with FTAs.

Sri Lanka has high tariff protection which ultimately backfire.

Sri Lanka has protectionist business interests their profits from overpriced goods have had priority over ordinary consumers and overall economic efficiency that comes from free trade.

Sri Lanka also has monetary instability, which has worsened under flexible inflation targeting, with a series of currency crises coming in rapid successions.

Forex shortages from mis-targeted interest rates under flexible or discretionary monetary policies have discredited free trade and liberalization in general and strengthened the hands of economic nationalists, analysts say.

The country also has monetary instability, which makes life difficult not only for investors but all economic agents.

Over the past two decades Sri Lanka’s exports have not grown as much as competitors. (Colombo/Dec05/2022)

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