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Tuesday February 7th, 2023

SriLankan Airlines break-up or not decision soon: Minister

ECONOMYNEXT – A decision on whether to spin-off subsidiaries of SriLankan Airlines or privatize the entire entity as a single entity would be made soon by a committee, Aviation Minister Nimal Siripala de Silva said.

SriLankan Airlines official had been summoned to the committee earlier this week.

The Ministry of Aviation first proposed that 49 percent of the catering unit, and 49 percent of ground-handling – which had given over to SriLankan – be sold to settle its debt. Then 49 percent of SriLankan be sold.

“There are two schools of thought,” Minister de Silva said. “At the cabinet the matter was discussed and his Excellency the President has referred the matter to the Treasury.”

Catering and ground-handling are captive profitable businesses which may represent easy money for those who buy the firms, according to some observers.

Ground-handling, which is a separate business from airline operations, however also represents easy money for the airline and can potentially bring tax revenues to the state if spun off and taxed appropriately.

Meanwhile Minister de Silva said the Chairman and Board was summoned before a Treasury Committee which is looking in to the matter.

“And they are discussing what is the best way out,” he said. “We will be guided not by a political decision but by a professional decision that will be given. So I think in one or two weeks they will consider this and given us a professional opinion.”

SriLankan Airlines has about a billion US dollars of debt including a sovereign guaranteed debt, and arrears to state-run Ceylon Petroleum Corporation on fuel bought before 2019.

Related

SriLankan Airlines loses Rs248bn in four months after soft-peg collapse

SriLankan Airlines has reported large losses since it was taken from its managing shareholder by former President Mahinda Rajapaksa. Some of the recent losses are from the collapse of the central bank’s soft-peg (flexible exchange rate). (Colombo/Dec04/2022)

Comments (4)

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  1. Diogenes Fernando says:

    I’d be interested to hear what Bellwether has to say about this…

  2. sacre blieu says:

    Full of deceit and deception in the manner its cost overruns. False and fictitious claims, and inflated costs, like many government institutes. Free rides by many, etc. The agony of the public being penalized for fraud, bribery and corruption should end forthwith, with no procrastination.

  3. sacre blieu says:

    Firstly and more importantly, find out those who have plundered the airline and feel that they have got away free from justice. Do not suffer the many with the burdens of the dishonest and corrupt few, the evidence of which stares in the face.

  4. emilyjoack says:

    Please sell the complete airline immediately
    you are wasting poor people’s money, and our children need a future

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Comments (4)

Cancel reply

Your email address will not be published. Required fields are marked *

  1. Diogenes Fernando says:

    I’d be interested to hear what Bellwether has to say about this…

  2. sacre blieu says:

    Full of deceit and deception in the manner its cost overruns. False and fictitious claims, and inflated costs, like many government institutes. Free rides by many, etc. The agony of the public being penalized for fraud, bribery and corruption should end forthwith, with no procrastination.

  3. sacre blieu says:

    Firstly and more importantly, find out those who have plundered the airline and feel that they have got away free from justice. Do not suffer the many with the burdens of the dishonest and corrupt few, the evidence of which stares in the face.

  4. emilyjoack says:

    Please sell the complete airline immediately
    you are wasting poor people’s money, and our children need a future

Sri Lanka Railways to seek PPPs to boost revenue streams

CURFEW RUSH: Commuters scrambling to get home after curfew was declared in Sri Lanka on March 20, 2020.

ECONOMYNEXT – Sri Lanka Railway department hopes to expand Public Private Partnerships and earn more non-passenger revenues to offset recurring operational costs, an official said.

“For the past 10 years, except the last few years, the Railway operational income only covers around 50 percent of the operational expense of the Department,” the General Manager of the Railway, D.S. Gunasinghe told EconomyNext.

“Our plan is to increase the non-passenger revenue of the Railway department.

“And we cannot expect and do not hope for money from the government.”

Sri Lanka Railways already has agreements with Prima, a food firm, and Insee Cement, which is bringing in additional income, Gunasinghe said.

“We had agreements for material transportation such as sand in the past, however it was canceled but we hope to start it again” he said.

The department will rent out its storage facilities and circuit bungalows for the tourism sector to create additional revenue streams.

Sri Lanka Railways recorded an operating loss of 10.3 billion rupees during 2021, compared to a loss of 10.1 billion rupees in 2020, the Central Bank 2021 annual report showed.

The total revenue of the SLR stood at 2.7 billion rupees, a 41.3 percent drop from a year ago.

(Colombo/ Feb 06/2023)

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Sri Lanka’s doctors distribute anti-tax hike leaflets to train commuters

ECONOMYNEXT – Doctors representing Sri Lanka’s Government Medical Officers Association (GMOA) distributed leaflets outside the Colombo Fort railway station against a progressive tax hike, threatening to address the government in a “language it speaks”.

GMOA Secretary Haritha Aluthge told reporters outside the busy Fort railway station Monday February 06 afternoon that all professional associations have collectively agreed to oppose the personal income tax hike.

“The government is taking a lethargic approach. They cannot keep doing this. They have a responsibility towards the citizens, the country and society,” said Aluthge.

The medical officer claimed that the government was acting arbitrarily (අත්තනෝමතික).

“If it cannot understand the language they’ve been speaking, if the government’s plan is to put all professionals out on the street, if it doesn’t present a solution, all professional unions have decided unanimously to address the government in a language it speaks, ,” he said.

Aluthge and other GMOA members were seen distributing leaflets to commuters leaving the railway station. Doctors in Sri Lanka in general are likely to earn higher salaries than the average train commuter, and a vast majority of Sri Lanka’s population, most of whom take public transport, don’t fall into the government’s new tax bracket. Many doctors, though certainly not all, collect substantial sums of money at the end of every month as doctor’s fees in private consultations.

About two miles away from the doctors, the Ceylon Blank Employees’ Union, too, engaged in a similar distribution leaflet campaign on Monday at the Maradana railway station. A spokesman promised “tough trade union” action if there was no solution offered by next week.

Sri Lanka’s cash-strapped government has imposed a Pay As You Earn (PAYE) tax on all Sri Lankans who earn an income above 100,000 rupees monthly, with the tax rate progressively increasing for higher earners, from 6 percent to 36 percent.

A person who paid a tax of 9,000 rupees on a 400,000 rupee monthly income will now have to pay 70,500 rupees as income tax, the latest data showed. This has triggered a growing wave of anti-government protests mostly organised by public sector trade unions and professional associations.

Even employees of Sri Lanka’s Central Bank recently joined a week-long “black protest” campaign organised by state sector unions against the sharp hike in personal income tax, even as Central Bank Governor Nandalal Weerasinghe said painful measures were needed for the country to recover from its worst currency crisis in decades.

The government, however, defends the tax hike arguing that it is starved for cash as Sri Lanka, still far from a complete recovery, is struggling to make even the most basic payments, to say nothing of the billions needed for public sector salaries.

Economists say Sri Lanka’s bloated public service is a burden for taxpayers in the best of times, and under the present circumstances, it is getting harder and harder to pay salaries and benefits.

Sri Lanka’s new tax regime has both its defenders and detractors. Critics who are opposed to progressive taxation say it serves as a disincentive to industry and capital which can otherwise be invested in growth and employment-generating business ventures. Instead, they call for a flat rate of taxation where everyone is taxed at the same rate, irrespective of income.

Others, however, contend that the new taxes only affect some 10-12 percent of the population and, given the country’s economic situation, is necessary, if not vital, at least for a year or two.

Critics of the protesting workers argue that most of the workers earn high salaries that most ordinary people can only dream of, and, they argue, though there may be some cases where breadwinners could be taxed more equitably, overall, Sri Lanka’s tax rates remain low and are not unfair.  (Colombo/Feb06/2023)

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Sri Lanka bond Yields end steady

ECONOMYNEXT – Sri Lanka’s bond yields closed steady on Monday, dealers said while a guidance peg for interbank transactions remained unchanged.

A bond maturing on 01.07.2025 closed at 32.15/30 percent, steady from Friday’s 32.05/10 percent.

A bond maturing on 01.05.2027 closed at 28.90/29.10, steady from Friday’s 28.90/20.05 percent.

The Central Bank’s guidance peg for interbank US dollar transactions appreciated by one cent to 361.96 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 370.35 rupees on Monday, data showed. (Colombo/Feb 06/2023)

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