Sri Lanka may seek more revenues for unknown liabilities: Prime Minister

ECONOMYNEXT – Sri Lanka may need to generate additional revenues next year to meet contingent liabilities which are not fully recognized at present, Prime Minister Ranil Wickramasinghe said.

"We still do not know how much of debt has been left behind by our predecessors," Prime Minister Ranil Wickramasinghe told a ceremony marking the 30th anniversary of formally setting up the Colombo Stock Exchange.

"We may have to bring a contingencies liability bill to parliament, sometime next year and the parliament may have to make recommendations. Parliament will have to decide how to raise additional revenues to pay for these expenditures."

In the budget for 2015, the current administration proposed to raise a ceiling of 4 percent imposed by a Financial Management Responsibility Act brought by a 2001-2004 to 10 percent, generating further contingent liabilities to the people.

The ousted Rajapaksa administration raised the limit to 7 percent from the more responsible 4 percent.

The budget also said that Treasury guarantees will be given to public private partnerships (a clever strategy that can socialize losses and privatize profits unlike privatization where the total risks and rewards are born by pure risk capital) for a fee.

Analysts have pointed out that tens of billions of guarantees issued for Sri Lanka’s Road Development Authority to borrow for roads are not in fact contingent liabilities but are in fact real direct liabilities.

The RDA does not generate revenues to repay these loans. Only two expressways are generating some revenues at present.

Sri Lanka’s budget is already in trouble from a steep salary increment given to win public sector votes and oust the Rajapaksa administration last year. More taxes have been charged from the people to pay state workers in a budget for 2016.

Money printing to finance the deficit has already sent the rupee crashing from 131 to 143 to the US dollar over 2015.

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Wickramasinghe said he will seek an IMF bailout next year with more global volatility expected next year.

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