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Sunday September 24th, 2023

Sri Lanka considers EPF member rep in Board after controversial DDO

ECONOMYNEXT – Sri Lanka is considering representation from members of the Employees Provident Fund to its Board, Labour Minister Manusha Nanayakkara said, a day after the Central Bank said the EPF will agree to domestic debt optimization (DDO) despite a disagreement among members of the country’s largest pension fund.

The Central Bank on Thursday informed the members of the 3.4 trillion-rupee worth EPF that it has opted for the government’s DDO option with a long-term view in the best interest of its members.

The fund has 2.6 million contributing members and 17.1 million non-contributing members as of end 2020. The central bank has been the custodian of the EPF.

There has been no representation to the EPF board from the members and no contributor has been informed over past investment decisions.

The central bank in the past has invested EPF money heavily into government securities and justified the decision to members with a return of around 10 percent in the past.

But there was no consent from members for the latest DDO decision, and analysts say there was no process to get some consent because no formal representation is allowed in the EPF Board.

“There should be some decision-making powers for EPF members,” Nanayakkara told reporters on Friday (15).

“This is why we have decided in future… there should be some representation from the members on the board.”

Sri Lanka is forced to restructure its domestic debt before seeking foreign debt restructuring, and the current move with least consent is to speed up the external debt restructuring, government officials have said.

A central bank analysis shows the return on EPF could fall to as low as 6.79 percent if the DDO option was not chosen within the next 12 years as against 8.02 percent if opting for DDO.

Nanayakkara, however, argued that through opting for DDO, the government has protected EPF members in assuring the minimum return for the next 12 years.

“Whether there is a higher return or lower return, we are trying to maintain a stable return for the employees,” he said.

“With the demand for government debt coming down in the future, there will be a declining trend in the interest rates and return. That’s why we are trying to protect.” (Colombo/September 15/2023)

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Sri Lanka India industrial zone around Trinco, maritime links mooted

ECONOMYNEXT – Sri Lanka’s Ports Minister Nimal Siripala de Silva had highlighted the desire of both the Governments to work closely to develop the industrial zone at Trincomalee, after accepting an invitation to participate in a maritime summit.

The Global Maritime India Summit (GMIS) will be held in India from October 17-19, 2023 at Mumbai where Sri Lanka has been invited at a partner country.

At a curtain raiser event on September 22, India’s High Commissioner in Colombo, Gopal Baglay had said both countries were working on enhancing sea connectivity according to a vision document launched during a recent visit of the President of Sri Lanka to India.

Minister de Silva will lead a delegation from Sri Lanka to the summit.

Secretary to the Ministry of Ports, Shipping and Waterways, Government of India, T K Ramachandran said the Global Maritime India Summit aims strengthen the Indian maritime economy by promoting global and regional partnerships and facilitating investments.

The event will give an opportunity to the Government of Sri Lanka to attracting greater investment from India in development of its maritime infrastructure, Ramachandran said.

It will also facilitate greater business to business interactions. (Colombo/Sept24/2023)

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Sri Lanka brings back import para tariff on milk

ECONOMYNEXT – Sri Lanka has brought back an import para tariff called the Ports and Airports Levy, to several grades of milk powder.

Milk powder has been removed from a list of PAL exemptions, making them liable for a 10 percent tax.

The PAL para tariffs are also a contentious issue in terms of export competitiveness, and the government has previously given undertakings that they will be eliminated.

Trade freedoms of the poor figure in an IMF/World bank reform program with the governments.

Milk is a protein rich food, in a country where children of poor families are facing stunting and malnutrition.

Economic nationalism is seen at high levels in food, with several businessmen are pushing for trade protection, amid an overall autarkist (self-sufficiency) ideology, going directly against policies followed in East Asia, which the same as hold up as examples.

Sri Lanka keeps dairy product prices up ostensibly to bring profits to a domestic dairy company and farmers.

Sri Lanka also keeps maize prices up, ostensibly to give profits to farmers and collectors. (Colombo/Sept22/2023)

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Sri Lanka govt warns liquor manufacturers: pay defaulted tax or lose licence

ECONOMYNEXT – Sri Lanka government which is struggling to raise the state revenue despite   higher taxes, has warned liquor manufacturers to pay defaulted taxes or lose their licence.

The government is now getting tough with past tax defaulters amid concerns over falling short of this year’s revenue target agreed with the International Monetary Fun (IMF).

“Liquor manufacturing firms owe us 660 crore rupees (6.6 billion rupees),” Siyambalapitiya told  reporters on Thursday (21).

“Most of this or around a third is the only excise tax amount to be paid. The rest is penalty. If a liquor manufacturer does not pay on time, we impose a penalty of 3 percent per month This means 36 percent (penalty) per annum,” he said.

“We have given them deadline to repay the basic excise taxes. If they don’t pay, we will cancel their licence.”

President Ranil Wickremesinghe’s government committed an ambitious revenue target among many other reforms to the International Monetary Fund (IMF) in return to a $3 billion loan package.

However, the revenue could face a short fall of 100 billion rupees, State Finance Minister Ranjith Siyambalapitiya has said.

A new Central Bank Act also has legally prevented the government of printing money at its discretion as  in the past.  (Colombo/September 24/2023)

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