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Sunday September 24th, 2023

Sri Lanka hopes to resume road projects after debt restructuring, IMF review

Fast in a straight line, the P400E didn’t do too badly on these mount-roads. But, a sportscar it is not

ECONOMYNEXT – Sri Lanka hopes to resume suspended road infrastructure projects soon and complete them faster with the expectation that foreign funding and grants will start after finalizing external debt restructuring and ongoing first review of the IMF programme, State Highway Minister Siripala Gamlath said.

The unprecedented economic crisis has forced the Sri Lanka government to suspend most of its infrastructure projects due to lack of funding.

All bilateral lenders stopped their funding immediately after the island nation declared bankruptcy through defaulting sovereign debts in April last year. Since then, Sri Lanka has not been repaying any foreign debts.

Gamlath hopes the suspended road projects could be resumed with fund allocations through the upcoming 2024 budget.

“Except one or two, all others have stopped (road projects). They have stopped because they don’t repay loans at the moment,” he told the reporters in Colombo on Monday (18).

“I believe that we can resume the implementation of the projects once we successfully finalize the IMF review discussions.”

An International Monetary Fund (IMF) delegation is in Sri Lanka to review President Ranil Wickremesinghe government’s performance against the given targets in a $3 billion IMF loan approved mid this year.

The IMF has already disbursed $330 million already. The first review is done before the IMF board approval for the second tranche.

Sri Lanka roads are not in dilapidated conditions.

However, Gamlath said maintenance of the roads has become a concern due to lack of money.

He said the government has been carrying out some projects at a slow pace while a few projects are continuing after authorities negotiated to pay the money to contractors in rupees instead of dollars as agreed earlier.

“When we finalize the debt restructuring, we should be able to start the projects that are now halted partially,” he said. (Colombo/September 18/2023) 

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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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