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Monday June 3rd, 2024

Sri Lanka taxes, economy to pick up from 2020 2H, deficit 7.5-pct of GDP: Treasury Secy

ECONOMYNEXT – Sri Lanka’s state revenues will pick up in the second half of 2020, as tax cuts and lower interest rates expand disposable incomes, investment and economic activity, Treasury Secretary S R Attygalle has said.

“While there could be an initial decrease in on government incomes it is expected that incomes will pick up in especially for the second half of 2020,” Attygalle told member of Sri Lanka’s Exporters Association Wednesday night.

“Clearly there many ways of reviving economies but no economy has revived with high tax rates in times of trouble.

“In fact high tax rates get economies into trouble. Hence the tax reforms announced in December 2019 was aimed at simplifying the tax system increase the disposable income of tax payers and thereby stimulating growth.”

He said estimates of tax losses made by some were overblown because economies were dynamic and not static.

“I believe that there are people who believe ceteris paribus (all other conditions remaining the same) actually exists,” he quipped.

Rate cuts and falling interest rates will also help drive economic activity. Stronger growth will in turn help reduce bad loans at banks, he said.

This year the Maha rice harvest is also expected to be strong, which will help incomes of the rural economy.

In 2019, economic growth is expected to have fallen to 2.6 percent of gross domestic product by the International Monetary Fund, which is projecting a revival to 3.7 percent.

Deficit

Attygalle said the government had already undertaken “significant expenditure rationalization” no new office space had been rented, no vehicles bought. Cost cutting measures will be monitored during the year, he said.

In 2020 the overall budget deficit is expected to be around 7.5 percent of gross domestic product, he said.

The deficit will in part be driven by 200 billion rupees of unpaid bill and unaccounted expense from last year, which will be paid in 2020, he said.

“And when such bills are paid and accounted for in 2020 the budget deficit which was to be around 5 percent this year will now increase to almost 7.5 percent,” he said.

The IMF said tax cuts and arrears from 2019 could drive the deficit to 7.9 percent of GDP.

2019 revenues are estimated to be around 1,800 billion rupees, he said from an initial estimate of around 2,400 trillion.

The IMF revised down the revenue for 2019 to 1,975 billion rupees in a November review after a soft-peg of the rupee with the US dollar collapsed from 153 to 182 to the US dollar in 2018 amid liquidity injections.

Currency collapse and corrective measures lead to output shocks and revenue shortfalls and credit contracts.

State owned enterprises have been told to ‘clean up their act’ he said, with significant improvements in the quality of their board of directors, though not perfect.

Performance indicators and a code of conduct were being devised for SOEs. (Colombo/Feb13/2020)

Water levels rising in Sri Lanka Kalu, Nilwala river basins: Irrigation Department

Sri Lanka Navy assisting in rescue operations (Pic courtesy SL Navy)

ECONOMYNEXT – Sri Lanka’s Irrigation Department has issued warnings that water levels in the Kalu and Nilwala river basins are rising and major flooding is possible due to the continuous rain. People living in close proximity are advised to take precautions.

“There is a high possibility of slowly increasing prevailing flood lowline areas of Kiriella, Millaniya, Ingiriya, Horana, Dodangoda, Bulathsinhala, Palinda Nuwara and Madurawala D/S divisions of Ratnapura and Kalutara Districts, up to next 48 hours,” it said issuing a warning.

“In addition, flood situation prevailing at upstream lowline areas of Ratnapura district will further be prevailing with a slight decrease.

“The residents and vehicle drivers running through those area are requested to pay high attention in this regard.

“Disaster Management Authorities are requested to take adequate precautions in this regard.”

The island is in the midst of south western monsoon.

DMC reported that 11,864 people belonging to 3,727 families have been affected due to the weather in Rathnapura, Kegalle, Kilinochchi, Jaffna, Mullaitivu, Kalutara, Gampaha, Colombo, Galle, Matara, Hambantota, Puttalam, Kurunegala, Kandy, Nuwara Eliya, Anuradhapura, Polonnaruwa, Badulla, Moneragala, and Trincomalee districts.

Meanwhile, the Meteorology Department stated that showers are expected on most parts of the island today.(Colombo/June3/2024)

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UNP gen secy defends call for postponing Sri Lanka poll, claims opposition silent

The UNP party headquarters in Pitakotte/EconomyNext

ECONOMYNEXT — United National Party (UNP) General Secretary Palitha Range Bandara has defended his call for postponing Sri Lanka’s presidential election by two years, claiming that his proposal was not undemocratic nor unconstitutional.

Speaking to reporters at the UNP headquarters Monday June 03 morning, Bandara also claimed that neither opposition leader Sajith Premadasa nor National People’s Power (NPP) leader Anura Kumara Dissanayake have spoken against his proposal.

“I have made no statement that’s undemocratic. My statement was in line with provisions of the constitution,” the former UNP parliamentarian said.

He quoted Section 86 of Chapter XIII of the constitution which says: “The President may, subject to the provisions of Article 85, submit to the People by Referendum any matter which in the opinion of the President is of national importance.”

Sections 87.1, 87.2 also elaborates on the matter and describes the parliament’s role, said Bandara.

“I spoke of a referendum and parliament’s duty. Neither of this is antidemocratic or unconstitutional. As per the constitution, priority should be given to ensuring people’s right to life,” he said.

“Some parties may be against what I proposed. They may criticse me. But what I ask them is to come to one position as political parties and make a statement on whether they’re ready to continue the ongoing economic programme,” he added.

Bandara claimed that, though thee has been much criticism of his proposal for a postponement of the presidential election, President Wickremesinghe’s rivals Premadasa and Dissanayake have yet to remark on the matter.

“I suggested that [Premadasa] make this proposal in parliament and for [Dissanayake] to second it. But I don’t see that either Premadasa nor Dissanayake is opposed to it. To date, I have not seen nor heard either of them utter a word against this. I believe they have no objection to my proposal which was made for the betterment of the country,” he said. (Colombo/Jun03/2024)

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300 of 100,000 trees in Colombo considered high risk: state minister

ECONOMYNEXT – Trees in Sri Lanka’s capital Colombo are being monitored by the municipal council, Army and Civil Defense Force as the severe weather conditions continue, State Minister for Defense Premitha Bandara Tennakoon said.

“Within the Colombo Municipal Council city limits, there are 100,000 trees. Of these, around 300 are considered high risk,” Tennakoon told reporters at a media conference to raise awareness about the current disaster management situation.

Not all trees required to be cut down he said. “We can trim some of the branches and retain them.”

The problem was that buildings in the vicinity of the tree had cut branches on one side, causing it to become unbalanced, the minister said.

New laws would be brought in so provincial/municipal institutions could strengthen enforcement of building codes.

“We don’t have a single institution that can issue a warning about a tree. Not one to tell us what trees can or cannot be planted near a road.

“Trees should be suitable for the area. Some trees have roots that spread and damage roads, buildings. When the roots can’t go deep, they tend to topple over.

“Now Environment Day is coming up, and anyone can go plant a tree by the road. We have to take a decision about this. We have to enforce laws strongly in future.” (Colombo/June3/2024)

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