Sri Lanka state salary contribution call from Jayasundera as tax revenues hit: Minister
ECONOMYNEXT – A call for Sri Lanka’s state workers to make some contribution to help the budget deficit came from the President’s Secretary in his capacity as the top public servant, information Minister Bandula Gunewardene has said.
The three main sources of taxes are from customs, excise (alcohol, tobacco, vehicles) and Inland Revenue, but the money is not coming, Minister Gunewardene said.
Sri Lanka has instead printed money on an unprecedented scale, putting the currency under pressure, triggering one downgrade so far and also making foreign private lenders more wary of lending to the domestic banking system.
Minister Gunewardene said President’s Secretary P B Jayasundera has made the call to contribute a part of the salary in his capacity as the top public servant in the country, though it was not an official call from the government.
Jayasundera had asked state workers to contribute half, one week or even a day’s salary to the windows and orphans fund in May.
Most workers in Sri Lanka’s productive sectors have taken salary cuts while some have lost jobs.
Sri Lanka’s state worker unions, usually driven by the opposition at the time and unions controlled by leftists parties demand salary hikes and unemployed graduates also demand more state jobs even in the country is in trouble or war, critics say.
“He has asked that the contribution be made to the widows’ and orphans fund so that any savings will reduce the pressure on the budget deficit,” Gunewardene said.
Proceeds of the windows and orphans fund also eventually goes to state workers families.
Out of every tax rupee collected from the people more than 50 cents go to pay state worker salaries and pensions. State workers also get other benefits including medical insurance.
Sri Lanka had to slap a series of taxes in 2017 after a steep hike in state worker salaries by then Finance Minister Ravi Karunanayake in 2015 de-stabilized state finances.
The last administration also made allowances, which were not pensionable during the time when Jayasundera was Treasury Secretary, eligible for pension.
A steep salary hike to executive state workers which would have gone into effect in 2020 was also halted by the current administration. However a steep cut in value added taxes in a fiscal ‘stimulus’ January, spooked rating agencies.
When the central bank cut rates and started printing money in a monetary ‘stimulus’ leading to pressure on the currency, the rating was downgraded. (Colombo/May08/2020)