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Tuesday February 7th, 2023

Sri Lanka local govt polls: Cabinet spokesman points to dire financial situation

ECONOMYNEXT – Sri Lanka’s upcoming local government elections still appears to be hanging in the balance with the date of the election yet to be gazetted and the cabinet spokesman pointing to the country’s dire financial situation when asked to comment.

Minister Bandula Gunawardena told reporters at the weekly cabinet press briefing on Tuesday January 24 that the cabinet of ministers has not discussed delaying the election but the government has informed the election commission and the courts that “this is a very challenging situation”.

The minister said the Ceylon Electricity Board (CEB), Sri Lanka’s state-run utility provider, was struggling to supply electricity while the state-run Sri Lanka Transport Board (SLTB) was also finding it difficult to run the bus service.

“Fuel is also supplied under the QR code system at a limited rate. There is no way to increase the fuel allocation for someone to go to election work even on a motorbike,” said Gunawardena.

Opposition lawmakers, however, contend that the complaint about fuel and electricity is a last-ditch attempt by the government to delay the local government polls, which the opposition says the ruling Sri Lanka Podujana Peramuna (SLPP) will lose badly.

Main opposition Samagi Jana Balawegaya (SJB) national organiser Tissa Attanayake said the government was trying to run away from the election.

“They’ve been trying different tactics but so far have been unable to find a constitutional means of delaying the polls,” said Attanayake.

“The latest tactic is to claim that they can’t provide security or that they can’t issue funds,” the MP said referring to an affidavit submitted to the Supreme Court by the Secretary to the Ministry of Public Administration that the Treasury was finding it difficult to find funds for the election.

“And now they’re saying they can’t provide fuel or electricity,” said Attanayake, claiming that it was an attempt at sabotage.

Though Sri Lanka’s election commission has announced a date for the local government polls – March 09 – an official gazette has yet to be announced, and a number of government officials from the president downwards has gone on record that the country simply cannot afford an election at this juncture.

Both the UNP and sections of the SLPP, which have teamed up to contest some of the local bodies, continue to insist that the elections should be postponed, despite both parties submitting nominations and placing deposits for the polls.

President Wickremesinghe is reportedly keen on holding a presidential election to seek a fresh mandate for his presidency once Sri Lanka has secured a widely anticipated International Monetary Fund (IMF) bailout.

Commenting on the IMF programme, Minister Gunawardena said: “If for some reason the IMF doesn’t sign this agreement, there is no tomorrow for this country.” (Colombo/Jan24/2023)

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  1. Kithsiri Perera says:

    Would be an idea to ask the public to raise the money needed for the election. The opposition and the public, clearly seem to want to have a regime change, so the public needs to work towards that goal since the state does not have the funds for the election process.

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  1. Kithsiri Perera says:

    Would be an idea to ask the public to raise the money needed for the election. The opposition and the public, clearly seem to want to have a regime change, so the public needs to work towards that goal since the state does not have the funds for the election process.

Sri Lanka Railways to seek PPPs to boost revenue streams

CURFEW RUSH: Commuters scrambling to get home after curfew was declared in Sri Lanka on March 20, 2020.

ECONOMYNEXT – Sri Lanka Railway department hopes to expand Public Private Partnerships and earn more non-passenger revenues to offset recurring operational costs, an official said.

“For the past 10 years, except the last few years, the Railway operational income only covers around 50 percent of the operational expense of the Department,” the General Manager of the Railway, D.S. Gunasinghe told EconomyNext.

“Our plan is to increase the non-passenger revenue of the Railway department.

“And we cannot expect and do not hope for money from the government.”

Sri Lanka Railways already has agreements with Prima, a food firm, and Insee Cement, which is bringing in additional income, Gunasinghe said.

“We had agreements for material transportation such as sand in the past, however it was canceled but we hope to start it again” he said.

The department will rent out its storage facilities and circuit bungalows for the tourism sector to create additional revenue streams.

Sri Lanka Railways recorded an operating loss of 10.3 billion rupees during 2021, compared to a loss of 10.1 billion rupees in 2020, the Central Bank 2021 annual report showed.

The total revenue of the SLR stood at 2.7 billion rupees, a 41.3 percent drop from a year ago.

(Colombo/ Feb 06/2023)

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Sri Lanka’s doctors distribute anti-tax hike leaflets to train commuters

ECONOMYNEXT – Doctors representing Sri Lanka’s Government Medical Officers Association (GMOA) distributed leaflets outside the Colombo Fort railway station against a progressive tax hike, threatening to address the government in a “language it speaks”.

GMOA Secretary Haritha Aluthge told reporters outside the busy Fort railway station Monday February 06 afternoon that all professional associations have collectively agreed to oppose the personal income tax hike.

“The government is taking a lethargic approach. They cannot keep doing this. They have a responsibility towards the citizens, the country and society,” said Aluthge.

The medical officer claimed that the government was acting arbitrarily (අත්තනෝමතික).

“If it cannot understand the language they’ve been speaking, if the government’s plan is to put all professionals out on the street, if it doesn’t present a solution, all professional unions have decided unanimously to address the government in a language it speaks, ,” he said.

Aluthge and other GMOA members were seen distributing leaflets to commuters leaving the railway station. Doctors in Sri Lanka in general are likely to earn higher salaries than the average train commuter, and a vast majority of Sri Lanka’s population, most of whom take public transport, don’t fall into the government’s new tax bracket. Many doctors, though certainly not all, collect substantial sums of money at the end of every month as doctor’s fees in private consultations.

About two miles away from the doctors, the Ceylon Blank Employees’ Union, too, engaged in a similar distribution leaflet campaign on Monday at the Maradana railway station. A spokesman promised “tough trade union” action if there was no solution offered by next week.

Sri Lanka’s cash-strapped government has imposed a Pay As You Earn (PAYE) tax on all Sri Lankans who earn an income above 100,000 rupees monthly, with the tax rate progressively increasing for higher earners, from 6 percent to 36 percent.

A person who paid a tax of 9,000 rupees on a 400,000 rupee monthly income will now have to pay 70,500 rupees as income tax, the latest data showed. This has triggered a growing wave of anti-government protests mostly organised by public sector trade unions and professional associations.

Even employees of Sri Lanka’s Central Bank recently joined a week-long “black protest” campaign organised by state sector unions against the sharp hike in personal income tax, even as Central Bank Governor Nandalal Weerasinghe said painful measures were needed for the country to recover from its worst currency crisis in decades.

The government, however, defends the tax hike arguing that it is starved for cash as Sri Lanka, still far from a complete recovery, is struggling to make even the most basic payments, to say nothing of the billions needed for public sector salaries.

Economists say Sri Lanka’s bloated public service is a burden for taxpayers in the best of times, and under the present circumstances, it is getting harder and harder to pay salaries and benefits.

Sri Lanka’s new tax regime has both its defenders and detractors. Critics who are opposed to progressive taxation say it serves as a disincentive to industry and capital which can otherwise be invested in growth and employment-generating business ventures. Instead, they call for a flat rate of taxation where everyone is taxed at the same rate, irrespective of income.

Others, however, contend that the new taxes only affect some 10-12 percent of the population and, given the country’s economic situation, is necessary, if not vital, at least for a year or two.

Critics of the protesting workers argue that most of the workers earn high salaries that most ordinary people can only dream of, and, they argue, though there may be some cases where breadwinners could be taxed more equitably, overall, Sri Lanka’s tax rates remain low and are not unfair.  (Colombo/Feb06/2023)

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Sri Lanka bond Yields end steady

ECONOMYNEXT – Sri Lanka’s bond yields closed steady on Monday, dealers said while a guidance peg for interbank transactions remained unchanged.

A bond maturing on 01.07.2025 closed at 32.15/30 percent, steady from Friday’s 32.05/10 percent.

A bond maturing on 01.05.2027 closed at 28.90/29.10, steady from Friday’s 28.90/20.05 percent.

The Central Bank’s guidance peg for interbank US dollar transactions appreciated by one cent to 361.96 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 370.35 rupees on Monday, data showed. (Colombo/Feb 06/2023)

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