President hopeful of economic recovery by end of 2023

President Ranil Wickremesinghe told the Parliament today that with political stability restored by the government, the economic crisis situation will improve in coming months as ongoing discussions with regard to debt restructuring are being finalized. 

“I never promise what cannot be delivered, and never lie in seeking power. I am currently implementing all the pledges in the budget speech and the last opening session of the Parliament. Through this, we have been able to create some stability in the economy. We are now moving from a negative economy towards a positive one. By the end of 2023, we can achieve economic growth.” President Wickremesinghe said.

Presenting the Statement of Government Policy in Parliament after ceremonially declaring open the Fourth Session of the Ninth Parliament, President Wickremesinghe said he had received positive news from creditors including Paris Club Creditors which reiterated its support for International Monetary Fund (IMF) approval for an Extended Fund Facility in a statement issued yesterday. 

“Introducing new tax polices is a politically unpopular decision. Remember, I am not here to be popular. I want to rebuild the nation from the crisis situation it has fallen. Yes, I am ready to make unpopular decisions for the sake of the Nation,” President Wickremesinghe said.

The President reminded the House the situation the country was in when he addressed the previous session of the Parliament, and the country's situation when the last budget was presented and also seven to eight months ago. 

The situation at present is different. "Due to the measures taken, we have been successful in reducing this burden gradually. Now there is stability in the economy. People are comfortable. We have been able to safely guide Mother Sri Lanka a long way across a challenging course. It was not an easy journey. However, it is not yet over," he stressed. 

He said that tax revenues decreased due to decisions taken in the past. As at 31st December 2019, 1.6 million businesses, companies and individuals paid taxes. However, by December 2021, the number of tax payers decreased to five hundred thousand. Government tax revenues fell to an all-time low.

The President noted that the Sri Lanka Administrative Service Association (SASA) had proposed introducing the Pay-As-You-Earn (PAYE) tax system even before the negotiations with the IMF were initiated. "Presently these are the suggestions we have implemented."

However, it is the same people who requested such tax policies, who are criticizing the present tax regime, he observed. 

"If PAYE tax is abolished, the country will lose 100 billion rupees. If the tax limit is raised to two hundred thousand rupees, the economy will lose 63 billion rupees. The total amount that will be lost is 163 billion rupees. We are presently not in a position to lose this income," he claimed. 

In other countries in the Asian region, most of the taxes are collected from a higher income bracket. However, Sri Lanka's situation is different. "In 2021, our direct tax was 21% while indirect was 79%. Therefore, we should take action to rectify this tax divergence. Then the tax burden on the general public will be reduced."

The President also spoke of a desire to provide a sustainable solution to the ethnic problem. 

"We know that there are still unresolved issues related to land in the North. In the Jaffna district, there are 3300 acres of state land including security camps. The extent of 100 acres that had been taken over for the Palali Camp were recently released. A decision has to be made regarding more land to be released for which discussions are being held with the Army and other parties. Discussions have also been initiated regarding the lands around other security camps," he remarked. 

Drafts are being prepared to establish a National Land Council and a National Land Policy. However, there will be no change in police powers, the President stressed. 

Steps are also being taken to introduce new rules and Ordinances. These include the National Commission on Women’s Act, Gender Equality Act, Women’s Empowerment Act and the Child Safety Act. 

The government is also paying special attention to climate change and plans to introduce a number of new ordinances in this regard. This includes the Climate Change Act, Social Justice Commission Act and Reforestation and Tree Cover Act, he further said. 

New ordinances are also being introduced for the economy. Zero Budgeting will be introduced for public expenditure management. New Acts such as the Revenue Authority Act, National Debt Management Act, Food Security Act and the Public Property Management Act are among those that will be introduced, the President told Parliament. 

Please go to link below to see President Wickremesinghe's full speech:

https://pmd.gov.lk/president-ranil-wickremesinghe-delivering-the-governments-policy-statement-during-the-opening-of-the-4th-session-of-the-9th-parliament/