Economic Crisis

Sri Lanka meets IMF delegation for first review of fund facility

Thursday September 14, 2023 3:10 pm

ECONOMYNEXT – Sri Lankan government representatives met with a team from the International Monetary Fund who are in the island to review the progress of the conditions for its Extended Fund Facility (EFF).

“We marked the inaugural meeting for the IMF’s first review of the EFF programme at the Presidential Secretariat,” State Minister of Finance Shehan Semasinghe said on X (formerly known as Twitter).

“We are collaborating closely with the IMF team throughout this process to overcome the challenges ahead of us.”

In the absence of President Ranil Wickremesinghe who is also Minister of Finance, Semasinghe said the government: “Is fully committed to establishing a sustainable economy.”

“We recognize the importance of working closely with all multilateral institutions, development partners and our friendly nations. We wish to thank the IMF team for the support extended to Sri Lanka.”

Co-State Minister of Finance Ranjith Siyambalapitiya said last week that Sri Lanka’s foreign reserves were in line with IMF targets.

“Last year, we were among countries with the lowest levels of state revenue,” said Siyambalapitiya.

“We had negative reserves. We now have 3.6 billion US dollars in reserves. This has moved us closer to our targets and to our agreements with the IMF,” he said.

The IMF’s EFF provides financial assistance to countries facing serious medium-term balance of payments problems because of structural weaknesses that require time to address.

To help countries implement medium-term structural reforms, the EFF offers longer program engagement and a longer repayment period. (Colombo/Sep14/2023)

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Logistics

Sri Lanka India industrial zone around Trinco, maritime links mooted

Sunday September 24, 2023 4:23 pm

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)

Economy

Sri Lanka brings back import para tariff on milk

Sunday September 24, 2023 8:49 am

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)

Economy

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

Sunday September 24, 2023 8:33 am

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)