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Sunday February 25th, 2024

Sri Lanka mini-budget supplementary allocations were not opposed, only debt hike: opposition

Sajith Premadasa is likely to drop the NDF tag and try a new name

ECONOMYNEXT – Sri Lanka’s opposition did not oppose increases in spending on several activities in a recent supplement to the vote-on-account but only the raising of the debt ceiling, opposition leader Sajith Premadasa said.

He claimed that the government asked for a large increase in debt of because taxes were suddenly cut and it ran out of money.

“The opposition was willing to support the supplementary expenses on development projects,” Premadasa told reporters in Colombo.

“We proposed an amendment to the vote-on-account which supported the allocations but we objected to raising the debt ceiling.”

“But the government withdrew both sections of the motion and are trying to blame the opposition.”

Ruling party ministers have blamed Premadasa for the inability to settle contractors before the upcoming New Year.

Premadasa rejected the charge, labeling it ‘hilarious’.

There was already provision in the vote on account to pay contractors but the opposition did not oppose the increases proposed, he said.

He said the government had got into trouble by suddenly cutting taxes and losing hundreds of billions of rupees in revenues.

Asked why the opposition did not at least support an increase in debt which matched the expenses proposed, he said the government should be able to manage its finances within the debt limit, and many allocations in the vote-on-account were cut giving room to re-allocate expenses.

He said a salary hike of 15,000 rupees to executive officers, pensions increase which cleared anomalies of recently retired state workers and 3000 rupees to 24,000 rupees in increases to state workers proposed by the Ranugge, salary commission were abolished by the new administration.

“The Gamperalia and Enterprise Sri Lanka program was also stopped,” Premadasa said.

“There are savings made from these cuts to pay contractors. The taxes were cut irresponsibly. But have they brought relief to the people? Where did the money go?

In Sri Lanka value-added tax is not required to be put on the bill to customers unlike in countries where the system works well.

As a result, producers do not quote the prices of goods and services net of taxes, except at restaurants.

When value-added tax was raised by the last administration, producers also raised prices to the nearest round number, and analysts called for the law to be regularized to international practice.

The legal blunder dates back the 2001-2004 administration where the original GST tax was re-named VAT and an attempt was made to hide taxes from the public, critics say. (Colombo/Feb24/2020)

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Sri Lanka could get US$500mn from ADB in 2024

ECONOMYNEXT – Sri Lanka could receive 500 million US dollars in support from the Asian Development Bank in 2024 based on the progress of policy reforms, Country Director of the Manila-based lender, Takafumi Kadono said.

The ADB expect to go to its Board around March or April with a 100 million US dollar power sector loan subject to the cabinet of ministers of approving a revised electricity reform bill.

A 100 million dollar loan to support SMEs could also be approved in the early part of the year. Sri Lanka is setting up a credit guarantee agency to support credit for small firms.

A 200 million dollar credit for financial sector was also slated for the year. The ADB gave the first tranche of the financial sector policy loan late last year.

A $100mn for the water sector could also be approved later in the year.

Sri Lanka could get around 200 to 300 million US dollars a year at the lowest rate, or concessional ordinary capital resources (COL) rate of 2 percent.

The balance of would come at the ordinary capital resource rate linked to SOFR.

The ADB has also started work on a ‘Country Partnership Strategy’ for Sri Lanka covering the 2024-2028 period, Kadodo said. (Colombo/Feb25/2024)

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Sri Lanka’s multi-aligned foreign policy based on friendship: Min

ECONOMYNEXT – Sri Lanka’s multi-aligned foreign policy is based on friendship to all and enmity to none, its Minister of Foreign Affairs has said.

“Non-alignment means not becoming a bystander. Non-alignment means you are not forced or coerced into a camp to take sovereign decisions… you make your own choices. Whether it is commercial, security, regional or otherwise,” M U M Ali Sabry said on X (twitter).

“I have repeatedly stressed that sovereignty is the right to have your own opinion on what’s right and wrong, and to stand by your principles. Our multi-aligned foreign policy is based on friendship to all and enmity to none,” Sabry was quoting from his speech at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI) Foreign Policy Forum, on the theme ‘Reassessing Non-Alignment in a Polarised World’.

Sri Lanka is one of the founding members of the Non-Aligned Movement.

The strategically located island has been increasingly walking a fine line between opposing global factions as it seeks to come out of a financial crisis. (Colombo/Feb24/2024)

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Sri Lanka’s Commercial Bank Dec net down on tax provisions

ECONOMYNEXT – Sri Lanka’s Commercial Bank of Ceylon reported profits of 6.9 billion rupees from the December 2023 quarter down 21 percent, despite an improvement in net interest income and lower provisions, amid a change in tax provisions.

Pre-tax profits were 8.89 billion rupees up from 2.4 billion rupees. There was a 6.4 billion tax reversal last year compared to a 1.7 billion rupee tax charge this year.

Commercial Bank reported earnings of 5.26 rupees for the quarter. For the year to December 2023 earnings were 16.07 rupees per share on total profits of 21.1 billion rupees, down 11.3 percent.

Net fee and commission income was down 1.2 percent to 6.1 billion rupees.

Net interest income went up 16.8 percent to 25.5 billion rupees, with interest income rising marginally by 1.3 percent to 73.0 billion rupees and interest expense falling 5.45 percent to 47.5 billion rupees.

Loans and advances to customers grew 4.06 percent to 1.17 billion rupees in the year to December. Debt and other financial instruments fell 10.5 percent to 649 billion rupees.

Financial assets measured and fair value through other comprehensive income was at 287 billion rupees, up from 117 billion rupees.

Impairment charges were 13.1 billion rupees, down from 19.6 billion rupees last year.

Gross assets were up 6.45 percent to 2.36 billion rupees. Net assets were up 5.51 percent to 214 billion rupees. (Colombo/Feb24/2024)

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