Govt managed to stabilize ISB interest rate to 1.5% - Mangala | Daily News

Govt managed to stabilize ISB interest rate to 1.5% - Mangala

Finance Minister, Mangala Samaraweera addressing the media yesterday. Picture by Ruwan de Silva
Finance Minister, Mangala Samaraweera addressing the media yesterday. Picture by Ruwan de Silva

The forming of a 52-day illegitimate government resulted in an increase of 1.5 percent in the interest rate on International Sovereign Bonds (ISBs) amounting to a loss of Rs. 6.4 billion in the recent issue of ISBs, Finance Minister,Mangala Samaraweera said yesterday.

An irate Minister Samaraweera lambasted the former president and now opposition leader, Mahinda Rajapaksa and his party for creating this jeopardy.

Addressing the media at the finance ministry yesterday, the minister said the country was made to suffer a colossal loss and embarrassed in the international world due to the down grading of sovereign bonds by rating agencies last year.

“Had the illegal government of Mahinda Rajapaksa continued, the interest rate would have gone up to three percent. We have to pay only 1.5 percent more as stability in the country was restored,” Samaraweera said adding that former Treasury Secretary P.B Jayasundara was called the assassinator of the economy by Wimal Weerawansa now a hardcore supporter of Rajapaksa who is the today the assassinator of the economy.

The issuance of ISB’s by Sri Lanka at a higher interest rate compared to low rates at which bonds were issued by Thailand and Greece at the same period was questioned by the Opposition and JVP leaders last week.

A US$ 1 billion five-year bond at an interest rate of 6.85 percent and a 10 year bond of US$ 1.4 billion at an interest rate of 7.81 percent were issued by the Central Bank last week when at the same time Thailand issued at 2.51 percent and Greece at 3.84 percent.

When asked how confident is he in achieving the 4.4 percent budget deficit this year Samaraweera said he is confident of achieving the target with a team of experts and a well thought out plan.

Economic Advisor to the Finance Ministry Deshal De Mel said there was a delay in getting the legislation through last year. “We are confident of meeting the revenue targets this year which will help to achieve the deficit target.” On plans to restructure SriLankan Airlines the minister said he personally feels the best option is to sell it off immediately. However, he said as the restructuring of the national carrier has been gazetted under State Minister Eran Wickramaratne he would leave it to him decide what is best.

Responding to the budget not having plans to address the shortage of workers especially in the construction and agriculture sectors the minister said he acknowledges there is a major issue with the dearth of workers in key sector which has been a persistent issue.

“The government is focusing on skills improvement training and moving towards high value agriculture will help free up workers for other sectors,” De Mel said.

The Finance Minister also added a feather to the government’s cap by subsidizing fuel prices in the latest price revision under the fuel pricing formula taking pride that fuel prices were revised by a minimum rate despite an increase in the Singapore bench mark prices.

He said the price of a liter of petrol (92) should have been increased to Rs. 137 and Auto diesel to Rs. 117 according to the pricing formula. “However, we kept price revisions low due to the Sinhala and Tamil New year season around the corner.”

The price of a crude oil barrel which was US$ 53.8 on December 18 last year according to the Singapore bench mark rate rose to US$ 70.7 a barrel by March.

Despite the assurance by the minister that people will not be burdened un-necessarily by high fuel prices will be revised according to the pricing formula on the 10th of every month.

Accordingly a litre of petrol (Octane 92) was increased by Rs. 3 from Rs. 129 to Rs. 132, petrol (Octane 95) by Rs.7 from Rs. 152 to Rs. 157, Auto diesel by Rs. 1 from Rs. 103 to Rs. 104 and Super diesel by Rs. 8 from Rs. 126 to Rs. 134.

“The increase of the basic salary of the plantation workers to Rs. 800 by an allowance of Rs. 50 is good news for plantation sector which will undergo a major restructuring soon,” the minister said adding that the 14 scholarships offered to the best students in the five streams and from the nine provinces at the A/L examination will be increased to 30.

‘We will be spending around Rs. 50 million per student a year which will include his or her air tickets, accommodation, training and course fees. We have already allocated Rs.168 million for the scholarship program under the C-fund,” the minister said.

Clearing misconceptions regarding the luxury tax on vehicles the minister said the tax will apply to only those who opened Letters of Credit (LCs) after March 6. With regard to the interest charged on children’s accounts the minister said five percent interest will be charged only on if the interest earned a month is Rs. 5,000 or more. The minister also cleared a misconception that all hotels need to register with the Sri Lanka Tourism Development Authority.

“It is only hotels which have over five rooms that need to register with the SLTDA,” the minister said.



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