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Moody’s Investors Service yesterday said the new Inland Revenue Act (IR Act) developed to build weak state revenues would help to gradually bridge the massive hole in the fiscal account and reduce the external vulnerability marred by heavy public debt in the medium term.

Moody’s, with the new act coming into place, estimates an increase in state revenue of 0.5 percent of gross domestic product (GDP) in 2019—the first full fiscal year since the new tax law in effect. 

According to the Finance Ministry estimates, the new IR Act will bring additional Rs.60 billion per annum by way of removing various tax exemptions and introducing new taxes such as Capital Gains Tax.

“With a very large debt burden and weak debt affordability weighing on its credit profile, successful implementation of revenue reforms will help foster fiscal consolidation,” Moody’s said. Along with the IR Act, Sri Lanka will also introduce a new taxpayer identification number system.

 “In conjunction with an automation of tax administrative efforts, such initiatives will help to raise tax compliance, broaden the current narrow tax base and improve the composition of the revenue base by raising the share of direct taxes,” Moody’s noted.

The new IR Act is expected to increase the share of direct taxes to 40 percent of GDP from the existing 20 percent.

Moody’s has a B1 speculative credit rating on Sri Lankan sovereign and the rating agency said the new IR Act is credit positive.

Sri Lanka is currently in an International Monetary Fund (IMF) programme in which reforms that contribute to fiscal consolidation are central to meeting the IMF targets.

 The next tranche from the IMF of its US $ 1.5 billion three-year extended fund facility is now overdue. While several of the IMF’s monetary, fiscal and reserves targets are on track, the Sri Lankan government has delayed in delivering on the promised energy pricing formula and the reforms into loss-making state-owned enterprises (SOEs) due to political challenges.

While the government has just announced its restructuring plans to the debt-laden national carrier, SriLankan Airlines, other SOEs remain a massive drag on the path to fiscal consolidation.

The higher oil prices in the global markets have already unsettled the state utility providers and the absence of a cost-reflective pricing formula has unnerved the government. Moody’s estimates the government revenue to rise 0.4 percentage point to 15.2 percent of GDP in 2018 and increase a further 0.8 percentage point to 16 percent of GDP in 2019 with the new IR Act.

“Meanwhile, we expect government expenditures to remain flat at 20 percent of GDP. As a result, we forecast the fiscal deficit to narrow to 4.8 percent of GDP this year and shrink to 4.0 percent of GDP in 2019, from 5.2 percent in 2017,” the rating agency stated.

Sri Lanka aims to reduce the fiscal gap to 3.5 percent of GDP by 2020, which is possible on stronger economic growth and higher revenue.

Moody’s also expects the economy to grow by 4.7 percent this year, picking up from 3.1 percent in 2017. As weather conditions normalize, a rebound in agriculture production and exports will boost growth this year.

A rebound in real GDP growth will be essential to help support future revenue gains.

Meanwhile, the rating agency also estimates Sri Lanka to reduce its public debt burden to about 74 percent of GDP by 2021 from 79.3 percent of GDP in 2017.

“Still, the government debt will remain well above the median of about 55 percent of GDP for B-rated sovereigns and will remain high for an economy of Sri Lank

Source: Daily Mirror

Minister Malik Samarawickrama has resigned as the United National Party (UNP) Chairman. According to Samarawickrama he tendered his resignation letter to UNP leader, Prime Minister Ranil Wickremesinghe.

The move comes at a time where the party is undergoing major reforms. Last week UNP General Secretary Kabir Hashim resigned from his post to make way for the reforms in the UNP.

In a special ceremony held yesterday (09) at Nonagama Cultural Centre in Ambalantota in Hambantota District, Hon. Mahinda Amaraweera, Minister of Fisheries and Aquatic Resources Development, and H.E. Taranjit Singh Sandhu, High Commissioner of India, jointly launched a project to provide livelihood support to nearly 70,000 people from the farming and fishing communities in Hambantota District.

The project envisages supporting livelihood activities by providing useful tools and equipment to the beneficiaries. In particular, 7000 bicycles, 1000 sewing machines and 60000 grub hoes are being disbursed to beneficiaries. Ceylon Fisheries Harbours Corporation is the implementing agency for the project and Government of India has provided 138 million SLR as grant assistance for this purpose. It is expected that close to 70,000 persons/families will be able to improve their incomes and enhance their livelihood thanks to this project.

Speaking on the occasion, High Commissioner Sandhu emphasized the importance of capacity building and recalled the numerous projects being implemented all over Sri Lanka with Indian assistance. He reiterated India’s readiness to continue to assist Sri Lanka wherever possible and whenever needed. He highlighted the enormous strides made by India in the field of agriculture, and offered to share expertise and technical assistance in this sector. Hon. Minister Amaraweera thanked India for its support for this important project.

This project is in continuation of Government of India’s commitment to assist the Government of Sri Lanka as part of our bilateral development partnership. India’s overall commitment for development assistance to Sri Lanka stands at a total of around US$ 2.9 billion, out of which US$ 545 million is pure grant assistance.

The President and the Prime Minister have decided to reshuffle the Cabinet before the Sinhala and Tamil New Year, Minister Akila Viraj Kariyawasam said.

He stated that the decision was taken by the two party leaders during a meeting held last night.

Kariyawasam also said that the United National Party (UNP) has officially informed the President that the party is unable to work with the SLFP Ministers and MPs who voted in favour of the no-confidence motion against the PM.

On Friday, President Maithripala Sirisena said that the future of the current cabinet ministers and the proposed reshuffle would be discussed at the Central SLFP Committee meeting scheduled to be held on Monday (April 9) and the reshuffle will be studied by a joint committee of the two parties and it would be done in a scientific manner.

A search operation is underway after seven persons from Homagama who went to the Knuckles Mountain Range have been reported missing. The individuals in question had contacted the police emergency hotline 119 and notified the dispatcher that they were stranded in the forest. The search operation is being carried out by the police stations at Rangala, Rattota and Laggala.

The decision regarding the removal of 16 SLFP MP’s from their Ministerial portfolios is likely to be decided at todays SLFP central committee meeting.

16 MP’s who voted against PM Wickramasinghe at the recent no confidence vote had written to the President yesterday requesting that they be removed from their Ministerial portfolios and be allowed to sit in the opposition. However the President is yet to respond to their request Minister Dayasiri Jayasekara said.

When asked if other SLFP Ministers in the Government who abstained from voting for the no confidence motion had also decided to quit their portfolios, Jayasekera said he was not aware of any such decision by them.

The MP’s also claimed that disciplinary action against them was unwarranted, since President Sirisena had been informed beforehand of their decision to vote in support of the JO’s no faith motion.

The NCM against the PM was defeated in Parliament last Wednesday with 122 votes against and only 76 votes being cast in favor. Among the SLFP Ministers who voted in favour of the NCM were SB Dissanayake, Dayasiri Jayasekera, John Seneviratne, Lakshman Wasantha Perera, Sudarshini Fernandopulle, Tharanath Basnayake, Dilan Perera, Susantha Punchinilame, Anura Priyadarshana Yapa, Susil Premajayantha, Lakshman Yapa Abeywardena, Chandima Weerakkody, Sumedha Jayasena and Anuradha Jayaratne.

UNP Parliamentarian Bandulal Bandarigoda has said that theUNP should be restructured in order to fulfill the absolute expectation of village level UNP supporters.

He also said that various committees being appointed are a mere eyewash and instead reforms should be brought forward to ensure the future victory of the party.

 Meanwhile speaking at a media briefing, UNP Parliamentarian Chaminda Wijesiri said, he believes the party will be reformed according to suggestions brought by the membership and as promised by the party leadership. “If they promise us these reforms to only win the no confidence motion we will not allow the leadership to get away with it” he said adding that the MPs will have to think of their supporters if such a situation arises.

Veteran writer Rupa Malathi Saparamadu passed away this morning (Dec. 8).

She was 85 years old at the time of her death. Rupa Malathi Saparamadu, was the late writer Martin Wickremesinghe's eldest daughter.

Saparamadu who wrote many books during her time was also a member of the Martin Wickremesinghe's Trust Fund as well as a director of the Tisara Institute.

Her remains lie at her residence in No 11, Pepiliyana Mawatha, Pepiliyana, Kohuwala. Funeral details will be announced later family sources said

Police have taken necessary action to quell the underworld killings reported from various parts of the country, IGP Pujith Jayasundera said.

Speaking at a ceremony in Colombo on Saturday, the IGP said wide ranging investigations have also been launched into the activities of the four underworld characters apprehended recently, who had maintained dealings with the two underworld kingpins Angoda Lokka and Makandure Madush.

Underworld kingpins Madhush Lakshitha alias Makandure Madhush and Lasantha Chandana Perera alias Angoda Lokka are currently said to be operating from abroad.

Angoda Lokka and Makandure Madhush are believed to be connected to the assassination of another underworld character Aruna Udaya Shantha alias Samayan and seven others, including a prison officer in Kalutara on February 27, 2017.

Source : Daily News

UNP Parliamentary Group has conveyed its refusal to work with SLFP Ministers who voted against Prime Minister Ranil Wickremesinghe at the No confidence motion vote going forward. The issue was taken up at yesterday's meeting between the UNP working committee and the party’s MP’s in parliament.

However the group had expressed their willingness to continue to be art of the consensus government with others in the SLFP who abstained from the crucial legislative vote thereby indirectly supporting the PM.

The UNP MP group is said to have reached agreement on how to move forward as a coalition with the SLFP at the eight hour meeting held at Temple Trees yesterday. The party had also discussed other matters such as internal reforms and the restructuring of the party as promised by Wickramasinghe.

The decision of the UNP came as it was annouced that 16 SLFP Ministers had written to President Maithripala Sirisena yesterday requesting they be permitted to relinquish their ministerial portfolios and function as MPs of the opposition.

Former Sri Lankan player and renowned commentator Russel Arnold was appointed as the tournament director for the Lankan Premier League (LPL), Sri Lanka Cricket announced.

“We consider bringing in a person in the caliber of Russel as the Tournament Director of the LPL will help the process of making it a successful tournament, especially considering his experience as a player and also his knowledge in promoting the game,” SLC President, Thilanga Sumathipala said.
The competition, which Sri Lanka will be hoping could be as big as the IPL and BBL, could run into complications though it is scheduled to be held at the same time as the Caribbean Premier League (CPL).

According to ESPNCricinfo, the SLC are going to ask the BCCI to allow lesser known Indian players to participate in the league.

If the Indian players are allowed to play it could be a coup for the tournament as they might attract a major TV deal.

Prime Minister Wickremesinghe led a UNP delegation for late night talks with President Sirisena at the latter’s Paget Road residence yesterday, to reach a consensus on how to work together in the aftermath of the divisive no-faith vote last week.

Accompanying the Premier to the meeting were UNP Ministers Mangala Samaraweera, Malik Samarawickrema, Vajira Abeywardane and Kabir Hashim. The two leaders decided that a cabinet reshuffle would take place next week.

The talks ended positively with both leaders keen to find a way to work together again to fulfil outstanding promises of their 2015 mandate, highly placed sources said. It was the second meeting between President Sirisena and the Prime Minister on the future of the coalition since last week’s no-confidence vote

Source : Sunday Observer