Political impasse causes revenue slippage of over Rs.72 bn
Sri Lanka’s prevailing public administrative dysfunction has sent ripples through the country’s economy causing a massive loss of billions of rupees, economic experts observed.
According to a recent, independent interim assessment made by a group of economic experts and senior officials as a prelude to the preparation of the Vote on Account, the economic loss and financial slippage caused to the country during the over, one-month-long political impasse has exceeded Rs.72 billion.
However when questioned about the economic loss highlighted in this independent assessment, a high ranking Treasury official noted that while there is an economic loss, revenue slippage decline in economic growth cannot be averted during any crisis be it natural or political.
The Finance Ministry has so far not made any assessment on the economic loss if there was any, following the ongoing political standoff, he said adding that the Budget Department may have considered the revenue slippage if any in preparing the Vote on Account.
The Cabinet of Ministers approved the proposal presented by Prime Minister Mahinda Rajapaksa, in his capacity as the Minister of Finance to present a proposal for the entire expenditure of Rs. 1,735 billion (Vote on Account).
The entire expenditure of Rs. 760 billion will be for the continuing process of state public services, Rs. 970 billion for the expenditures previously authorised by different laws and Rs. 5 billion for the Government Advance Account.
Total revenue slippage caused to the tourism industry and the impact of rupee depreciation relating to US$ foreign outflows from Sri Lanka’s equity and bond markets was estimated at over Rs. 50 billion during this political crisis period, informed sources revealed.
The current political situation, recent tax revisions and ad hoc concessions offered to the public on the directions of the new Finance Minister appointed by the President has led to a loosening of fiscal policy declining in investment and growth of the country, economic experts said.
Some 5 tax revisions will come into effect from January 1 on the directions of the Finance Ministry if those amendments are approved in Parliament.
Out of it three such tax measures – Telco levy reduction, VAT threshold increase, and WHT on interest income – the revenue loss would be around Rs.75 billion, a provisional estimate revealed.