The Government needs to engage the finance and banking industry, make them partners to work on Government’s development and investment areas at a balance sheet level and not merely at the bottom line level, Jonathan Alles, CEO –HNB said.
Speaking at a post budget forum organised by the Centre for Banking Studies- Central Bank of Sri Lanka under the theme ,’Dissecting the Budget 2020’, Allas said banks need to support initiatives that’re already outlined in the October Road Map and Banking industry has a significant role to play in this budget, working closely with the Central Bank in particular with regard to SRR allocations towards renewable energy as the Government plans to reach 70% renewable energy target by 2030.
Noting that banks would have the opportunity to bring green finance and support some of the lending that needs to be made Alles said, “It’s a good opportunity for us to work with our Development Financial Institutions (DFIs) and Mandated Lead Arrangers (MLAs) and other partners to support some of these sectors that the Government intends to grow and look for long- term partnerships which we’re already beginning to see and work with.”
Elaborating on the banking industry’s role in supporting the Government’s endeavor in managing some of the short- term cash flow requirements, Alles said, “I know from time to time we go overseas and ask investors to come and invest in Sri Lanka, but then we need to walk the talk. We also need to make sure that we’ve created an investment climate for them with minimum surprises. These investors would actually like if banks are getting fully involved in working in the economy, making it work while developing people and the country.”
“I think the smoother your cash flow is, it is predictable for investors to come in. There has been much talk about different types of taxation. I like the fact that there is a lot of digitization coming into tax; nevertheless it is still fairly bureaucratic and there is a bit of paper that needs to be done,” he noted.
Despite the fact that the Government Departments are well in place in terms of structures and frameworks to collect tax, Alles said, “We still find these processes quite time consuming, unproductive and ineffective .And they would have been efficient and generated more cash flow for the government when the Government actually needed it.”
He emphasized the need to optimize current methodologies, adopted for taxation. Speaking at the budget forum Chairman John Keells Holdings Krishan Balendra welcomed budget proposals to encourage wellness tourism and other forms of tourism like conferences to spur more investments in the tourism industry.
“Impact of the pandemic in the last two years has been unprecedented in particular on the hotel sector. Due to the successful vaccination program we’re now seeing a gradual pick up in tourist arrivals and forward bookings.We’ve four resorts in the Maldives where the country opened up for tourism well before Sri Lanka and we’ve seen tourism is now bouncing back to normal in the month of November and going forward it is actually looking even better than normal. So there is a hope that even in Sri Lanka we will see quite a rapid bounce in tourism.”
Apart from that, Balendra welcomed the Government’s efforts to control the fiscal deficit noting that it will help to keep the interest rates at manageable levels as higher fiscal deficit can result in private sector being crowded out from credits.
Balendra also expressed satisfaction over some of the revenue enhancing measures including use of technology to increase the tax net, some of the expenditure measures such as the focus on financial management, public institutions; focus on loss making SOEs, the focus on results based management system, and so on. He added that these measures could contribute to a lower fiscal deficit.
Balendra also hailed some of the budget proposals including allocating funds to develop infrastructure in investment promotion zones, SME development, road and highway development and removal of registration fee for startups.
“It is good to see the country is focusing on startups, in particular digital start ups which can be a critical driver for innovation and economic growth.”
Noting that Lack of speed of dispute resolution and lack of investments in the legal infrastructure again is a big bottle neck for doing business in the country, Balendra welcomed monetary allocation by the Government to develop legal infrastructure in the country.
“The other interesting reference was to the energy plans. Sri Lanka is planning on developing a renewable energy front in particular wind power which can far exceed our own demand. So there could be an opportunity for us to export renewable energy. There was reference in the budget speech on creating this energy hub; I think that would be a worthwhile area to perceive.
The other area around broadband access around the country again is a welcome move and good for businesses as we link up retail partners and distribution partners across the country. But we’ve seen some issues around connectivity,” Balendra said.
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