• Books, school & health equipment, medicine to be exempted    
• Econ. Reforms Act in the offing 

President and Minister of Finance, Economic Stabilisation and National Policies Ranil Wickremesinghe asserted that the authorities aim to exempt items such as books, school and health-related equipment, and medicine from the Value Added Tax (VAT) list and to continue reducing the VAT rate.

Addressing the Parliament yesterday (6), President Wickremesinghe signalled the forthcoming submission of the Economic Reforms Act.

The economy, which experienced consecutive contractions for six quarters from 2022 to the second quarter of last year (2023), began to show signs of recovery from the third quarter of 2023 onwards. Forecasts from international financial organisations suggest that Sri Lanka is poised to achieve a growth rate of 2-3% this year. In 2023, Sri Lanka managed to bolster State revenue by over 50% compared to the previous year (2022). Sri Lanka attained a surplus in the primary account last year and this enabled Sri Lanka to settle all outstanding payments owed to contractors who had rendered services to the Government over the past three to four years. In the first eight months of 2022, major State-owned enterprises collectively incurred a loss of Rs. 720 billion. However, in the corresponding period of 2023, Sri Lanka transformed this into a profit of Rs. 313 billion. In 2022, the Companies Registrar recorded the registration of 17,819 companies, a figure that rose to 22,376 in 2023 while additionally, in January, 2024, 1,995 new companies were registered. Inflation dropped from 70% in September, 2022, to 5.9% by February, 2024. Interest rates have dropped from over 30% in 2022 to less than 10% in 2023. The usable foreign exchange reserves, which stood at less than United States dollars ($) 20 million in mid April, 2022, have surpassed $ 3 billion. Import restrictions have been lifted, with the exception of private motor vehicles. The balance of payments achieved a surplus in the current account for the first time since 1977, during 2023. The dollar depreciated from Rs. 363 to Rs. 308 as of Tuesday (5). Additionally, Sri Lanka has ceased the practice of using taxpayers’ money to cover the losses of Government institutions and instead, Sri Lanka is restructuring these institutions and transferring them to investors. The tax network will be expanded, with the total number of tax files surging to over one million in 2023, marking a 130% increase. The practice of printing money has been completely halted. The Governance Diagnostic Report has been released.

“The country has achieved a certain level of economic stability at present. So, if we continue our current trajectory with the same vigour, our economy will be in significantly better shape by the end of this year. Ongoing efforts are underway to enhance governance and mitigate corruption risks. We’re also attracting investments and establishing a new institution for this purpose. Efforts are underway to modernise the agriculture sector, with several foreign countries expressing interest in starting large-scale farms under food security initiatives. We’re gradually unlocking foreign markets for exports, focusing on non-traditional export items. Under the ‘Urumaya’ programme, two million families will acquire land ownership, reclaiming inherited land lost over generations. We’ve tripled social security spending to protect the poor and the vulnerable from the economic crisis, benefiting 2.4 million low-income families with Aswesuma. Around 4.5 million school children are now covered by the Suraksha insurance scheme. Development initiatives have been begun in numerous villages across 89 Divisional Secretariat (DSs) Divisions as part of the Kandukara Dashakaya with each regional Secretariat allocated Rs. 100 million for this purpose. Development activities in constituencies are underway through the decentralised budget, and agricultural modernisation initiatives have been launched across 25 DSs. We’ve suspended the Parate law for business establishments and offered relief on electricity bills this week. Some suggest retail solutions or collecting funds from Sri Lankans abroad, but these are deemed inadequate by those with economic knowledge. There are however claims of unnecessary tax burdens on the people, as well as excessive hikes in the electricity bills and fuel prices. There’s a commonly held belief that taxes should be collected from the people gently, akin to plucking flowers without crushing them. To sustain our current course, I anticipate presenting the necessary ordinances and regulations to the Parliament, including the Economic Reforms Act”.