President Ranil Wickremesinghe said in Anuradhapura on Saturday (28) that an extra allowance will be granted to public servants in the third quarter of this year as a relief measure. The President said that his aim is to build a debt-free economy within the next 5-10 years where people can live with a sense of pride and without having to bow their heads to anyone, as it was during the Anuradhapura era where the country maintained a strong and debt-free economy.
Stating that he had a good understanding of the difficulties faced by the people, the President expressed confidence that with the expected economic progress expected to be achieved by 2024, relief to all, including salary increases could be provided.
The President also mentioned that if the revenue of the government is stabilized marking progress in the economy, an extra allowance is expected to be granted to the public servants in the third quarter of this year as a relief measure.
President Ranil Wickremesinghe made this observation yesterday (28) addressing the ceremony whereAkta Pathra (Credentials) was presented to the new Atamasthanadhipathi, the Chief Sangha Nayaka of the Siam Maha Nikaya, Malwathu Chapter, Nuwara Kalaviya, Most Venerable Dr.Pallegama Hemarathana Nayaka Thera at the Jayasri Maha Bodhiya premises.
Hence, I intend to speak a few words about it because the clergy is very keen to know how the country’s economy is fairing. We should embark on future activities with a clear knowledge of where the country’seconomy is at today.
Last April, we informed the world that we were not in a position to repay our debts. After assuming duties as the President, I made a request from the IMF about restructuring our debts. I notified them that the loans we had obtained were very high, and the country was not in a position to repay them. In order to be able to repay the loans, it was suggested to discuss with the International Monetary Fund (IMF) and prepare a plan. Countries such as China, Japan and India, which gave us loans, told us to first discuss with the IMF and prepare a plan. Then it was informed that the assistance that can be provided by those countries will be discussed.
Therefore, we had to discuss with the International Monetary Fund how to repay these loans. We cannot continue without this support. If we don’t get this support, our economy will collapse. Funds and foreign exchange in our country are not sufficient.
Last year our economic growth rate was minus 11%. This year, if we plan properly, we can make it minus 3.5%. But, in the event there are global issues, it could even be minus 4%. However, we expect to bring it down to minus 3.5%.
With this aim in focus, we expect to move the economy forward from 2024. We have received some aid due to the measures we took when we ran out of dollars. We are expected to receive more assistance in the future.
Similarly, we will have an excess of paddy due to the success of the season this year with the provision of fertilizers. The country will revert to the state it was in May, June, and July of last year if we abandon this initiative. If that occurs, you will encounter another challenge.
If that occurs, we won’t have any money left over for even three weeks to purchase medications.The countries that provided us with loans advised us that their revenue had also reduced and that it would be difficult to provide their support if their citizens couldn’t bear the majority of the burden to deal with this problem. Because they disclosed that the funding was obtained from taxes paid by their citizens.
In 2019 our total revenue is 15% of the gross domestic product. However, as a result of the tax reduction, the total income has decreased to 8.4% of the gross domestic product by 2022. Those
countries informed us if assistance is provided, we should raise the total revenue to 15% of the gross domestic product to the level of 2019. Accordingly, the current income should be increased by 75% during the next three years. That is our challenge. That will require you to carry a heavy burden.
However, we can go on. We are unable to refute the facts that they give. To explain this situation further, we had 1500,000 files in 2019 that paid their income tax in full. Next, there were 122,000 files that pay VAT and Nation Development Taxes (NDT).
There were 1600,000 files in total. With the subsequent removal of these taxes, by December 2021, we had 400,000 income tax files. It had reduced from 1600,000 to 400,000.
Accordingly, they questioned us on how could they give us the taxes they collected from their people when we reduce the collection of these taxes. It is that we have worked to bring about this state of taxation. Without this step, we cannot move forward.
Our income on January 25, 2023, was Rs.145 billion. When all capital costs, such as wages, pensions, and welfare, are considered, the amount is Rs.143 billion. In addition, an additional Rs.355 billion is required to discharge the loan. In January, we spent a total of Rs.498 billion. But we make Rs.145 billion annually. We can bounce back from this circumstance over time if a structured program is put in place.
In addition, there are other issues in 2022, including a 794 billion loss of government institutions. This year, we don’t have the funds to pay for them. Therefore, we must make up for this loss. Everyone is currently being affected by the electricity bill issue.
The International Monetary Fund has informed us that if we do not receive tax revenues, we will not provide tax revenues from other countries. They pointed out another thing. Common people have the highest tax expenses in our country. In countries like Thailand, tariffs account for 2.8% of government revenue. 30.1% is received from income taxes. India receives 4.5% from tariffs and 45.6% from income taxes. Our country receives 26.3% from customs duties and 17.7% from income taxes. Therefore, the International Monetary Fund informed that when taxes are raised, the income tax should be raised and low-income people will be inconvenienced due to the collection of other taxes.
I agree that we are all in a difficult situation. We have worked to provide a good harvest to the farmers in the Maha season. All of us are bearing the pressure caused by the increase in the price of goods, transportation costs and oil. We are unable to avoid this.
I hope to provide extra allowances to all government employees as a relief in the third quarter of this year if our income stabilizes or continues to improve. As the state of our economy improves, wages should rise.We must boost our earnings.Being a politician makes it tough to speak this truth. But I always reveal the truth, even if I win or lose. I request everyone to support the Parliament to get out of this difficult situation for the people.
The countries of the Paris Club, including Japan, have accepted and discussed our proposals together and also discussed them with India.
The proposal has now been approved by China. With this situation, we receive foreign currency by the month of February. Then, these issues can be resolved in a methodical manner. We need to build a new economy. The Anuradhapura kingdom had no debt. It was a powerful kingdom. In order to strengthen the economy, we must keep that in mind.
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