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Friday March 1st, 2024

Sri Lanka needs to balance global powers for economic growth: Minister

ECONOMYNEXT – Sri Lanka will have to manage and balance all the global powers to achieve its economic growth and thus the island nation’s foreign policy should aim for economic diplomacy instead of political diplomacy, State Foreign Minister Tharaka Balasuriya said.

Analysts say Sri Lanka has become the center of proxy geopolitical war between the country’s neighbour India and the World’s second largest economy China.

China’s increasing influence in Sri Lanka has raised security concerns to India and that has already led Colombo to suspend the arrival of Chinese research vessels to the island nation.

President Ranil Wickremesinghe government has promised a non-aligned foreign policy which was not followed by his predecessors. Successive Colombo governments’ foreign policy had leaned towards either China or the West in the past.

“We need to deal with everybody,” Balasuriya told reporters last week when asked over the foreign policy on international issues like the war in Ukraine and Palestine.

He said the country will strictly follow the non-aligned foreign policy.

“As India being our neighbour, we have to make sure that India’s security concerns are addressed. India is not the old India where they went and put dhal to Sri Lanka,” he said referring to a 1987 Indian intervention in the Northern war zone.

In June 1987, Indian Air Force planes, escorted by fighter jets, flew over Sri Lanka and dropped nearly 25 tons of relief supplies including dhal to ethnic Tamil residents, which later led the then Sri Lankan government to suspend its military offensive against Tamil rebels in the region.

The move came in defiance of Sri Lanka’s refusal to accept a unilateral Indian aid mission to the Tamils, which Sri Lankan later protested as “a naked violation of our sovereignty . . . and territorial integrity.”

However, India later assisted Sri Lanka along with other international powers to end a nearly three-decade war in 2009.

Balasuriya said the relationship with India has changed now.

“In two or three year time, India will be the third largest economy in the world. India has been a true friend. India stepped in when the IMF should have helped us, he said referring to a $4 billion assistance including an Indian credit line when Sri Lanka declared sovereign default in 2022.


“China is a very important investment partner of Sri Lanka. We want to further deepen our relationship with China when it comes to investing in Sri Lanka. We want to align ourselves with the global supply chain.,” he said.

China became the island nation’s top lender and foreign investor after the end of the war. However, the West later blamed China for dragging Sri Lanka into debt trap by lending for infrastructure projects which never gave Sri Lanka return on investment.

China has rejected the allegation.

“When it comes to political matters such as the UN Human Rights Council, Russia and China have always backed Sri Lanka. So, we also have to reciprocate. If we don’t reciprocate, other countries will not be backing us.”

Sri Lanka’s strategic location in the Asia Pacific region has attracted many world powers.

Balasuriya said Sri Lanka must work closely with the Western powers like Europe, the United Kingdom, and the United States as they are the island nation’s biggest export markets.

“So, we need to work closely with the European countries also and our values are very much in line with the European values when it comes to things like human rights, when it comes to things like democracy.”

He said most of the country’s dollar remittances come from the Middle East while Sri Lanka wants to build relations with emerging regional powers like Indonesia, Iran, and Nigeria as well as with African countries.

“Sri Lanka as a small country does not have global political ambitions. We are not going to invade a country,” he said.

“So, our foreign policy should be based on making sure that Sri Lanka achieves economic growth. We want to shift our foreign policy more towards economic diplomacy than towards political diplomacy.” (Colombo/Feb 05/2024)

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Sri Lanka’s RAMIS online tax collection system “not operatable”: IT Minister

ECONOMYNEXT – Sri Lanka’s online tax collection system RAMIS is “not operatable”, and the Ministry of Information Technology is ready to do for an independent audit to find the shortcomings, State IT Minister Kanaka Herath said.

The Revenue Administration Management Information System (RAMIS) was introduced to the Inland Revenue Department (IRD) when the island nation signed for its 16th International Monetary Fund (IMF) programme in 2016.

However, trade unions at the IRD protested the move, claiming that the system was malfunctioning despite billions being spent for it amid allegations that the new system was reducing the direct contacts between taxpayers and the IRD to reduce corruption.

The RAMIS had to be stopped after taxpayers faced massive penalties because of blunders made by heads of the IT division, computer operators and system errors at the IRD, government officials have said.

“The whole of Sri Lanka admits RAMIS is a failure. The annual fee is very high for that. This should be told in public,” Herath told reporters at a media briefing in Colombo on Thursday (29)

“In future, we want all the ministries to get the guidelines from our ministry when they go for ERP (Enterprise resource planning).”

President Ranil Wickremesinghe’s government said the RAMIS system will be operational from December last year.

However, the failure has delayed some tax collection which could have been paid via online.

“It is not under our ministry. It is under the finance ministry. We have no involvement with it, but still, it is not operatable,” Herath said.

“So, there are so many issues going on and I have no idea what the technical part of it. We can carry out an independent audit to find out the shortcomings of the software.”

Finance Ministry officials say IRD employees and trade unions had been resisting the RAMIS because it prevents direct interactions with taxpayers and possible bribes for defaulting or under paying taxes.

The crisis-hit island nation is struggling to boost its revenue in line with the target it has committed to the IMF in return for a 3 billion-dollar extended fund facility. (Colombo/Feb 29/2024) 

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Sri Lanka aims to boost SME with Sancharaka Udawa tourism expo

ECONOMYNEXT – Sri Lanka is hosting Sancharaka Udawa, a tourism industry exhibition which will bring together businesses ranging from hotels to travel agents and airlines, and will allow the small and medium sector build links with the rest of the industry, officials said.

There will be over 250 exhibitors, with the annual event held for the 11th time expected to draw around 10,000 visitors, the organizers said.

“SMEs play a big role, from homestays to under three-star categories,” Sri Lanka Tourism Promotion Bureau Chairman, Chalaka Gajabahu told reporters.

“It is very important that we develop those markets as well.”

The Sancharaka Udawa fair comes as the Indian Ocean island is experiencing a tourism revival.

Sri Lanka had welcomed 191,000 tourists up to February 25, compared to 107,639 in February 2023.

“We have been hitting back-to-back double centuries,” Gajabahu said. “January was over 200,000.”

The exhibition to be held on May 17-18, is organized by the Sri Lanka Association of Inbound Tour Operators.

It aims to establish a networking platform for small and medium sized service providers within the industry including the smallest sector.

“Homestays have been increasingly popular in areas such as Ella, Down South, Knuckles and Kandy,” SLAITO President, Nishad Wijethunga, said.

In the northern Jaffna peninsula, both domestic and international tourism was helping hotels.

A representative of the Northern Province Tourism Sector said that the Northern Province has 170 hotels, all of which have 60-70 percent occupancy.

Further, domestic airlines from Colombo to Palali and the inter-city train have been popular with local and international visitors, especially Indian tourists. (Colombo/Feb29/2024)

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Sri Lanka rupee closes at 309.50/70 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 309.50/70 to the US dollar Thursday, from 310.00/15 on Wednesday, dealers said.

Bond yields were slightly higher.

A bond maturing on 01.02.2026 closed at 10.50/70 percent down from 10.60/80 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.10 percent from 11.90/12.00 percent.

A bond maturing on 01.07.2028 closed at 12.20/25 percent.

A bond maturing on 15.07.2029 closed at 12.30/45 percent up from 12.20/50 percent.

A bond maturing on 15.05.2030 closed at 12.35/50 percent up from 12.25/40 percent.

A bond maturing on 01.07.2032 closed at 12.55/13.00 percent up from 12.50/90 percent. (Colombo/Feb29/2024)

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