Year 2016 will be a decisive one for SL
View(s):The year 2016 is slated to be a ‘decisive’ one for the country as Sri Lankans gear to face new challenges such as current, fiscal and democratic deficits faced by the country, according to N.R. Gajendran, Senior Partner, Gajma Tax Consultants.
“2016 has been defined as a strategic year for Sri Lanka, the year that the country will, in fiscal terms come of age, with Debt to GDP ratio down by 65 per cent, budget deficit at less than 3 per cent, with US$ 4,000 per capita income and a current account surplus. This is the first step in becoming a middle income country and this will be fundamental indicators of macroeconomic stability,” he said, addressing a post budget seminar organised by the Sri Lanka Economic Association recently.
He said that achieving this culture of surplus will leave a crucial mark on the country. “Once this tide is turned, every successive government will be forced to maintain a surplus and this has huge implications for the country,” Mr. Gajendran said. He said that tax revenues cannot be achieved at present because Sri Lanka is being incentivised through reduced taxes or exemptions. “My complaint in this regard is with tax holidays which will bring about a total distortion to the country and the people at large.”
Digging at the weakness of the opposition, he said, “We also have a noticeable non-fiscal issue in that we live in a democratic environment but the strength of a democracy is not in the strength of the government but in the strength of the opposition. The opposition is missing in action. If opposition is not opposing the government that factor needs to come in otherwise you do not have the proper checks and balances within the system as a whole.”
Small banks merging with their larger counterparts, he said, will create an oligopoly. “But I think it’s being encouraged in order to get these banks onto a stronger footing,” he said, adding that banks should be offered the choice of either merging or finding ways to raise capital instead since the goal of those proposals is to strengthen the sector.
He added that the crash in gold prices and the vehicle market coming down has seen finance companies facing issues and it’ll be difficult for them to absorb the cost of NBT. “Therefore finance companies need to restructure their model,” he said.