The decision to restructure and relaunch public enterprises, which has been a major responsibility for the state, to widen the tax net and to significantly reduce the retirement age in the public sector during the provisional budget presented last week , has been praised by industry experts and business figures.
Advocacy Chairman and Board Director of CFA Society Sri Lanka, Ravi Abeysuriya, said the interim budget took some key policy decisions in the right direction, to remove the huge burden on the people by restructuring state-owned enterprises, including the issuance of state bank shares. to employees and depositors and re-establishing the National Public-Private Partnership Agency.
Implementing the new Central Bank law and widening the tax net by requiring all those over the age of 18 to open tax records are imperative for the country’s economic progress.
However, the main challenge for the government is to ensure that the budget proposals are implemented, as the track record of successive governments in implementing the budget proposals is very poor”.
Senior Professor, Weed Science, University of Peradeniya and President, Weed Science Society of Sri Lanka, Prof. Buddhi Marambe said the draft budget focused on agriculture sector (crops and animals) and food security for the four months remainder of the year.
The budget recognizes that there is food insecurity in the country, declining harvests, shortage/lack of agrochemicals (fertilizers and pesticides) and other inputs, shortage of seeds and planting materials and l abandonment of culture, that there is a need to merge agriculture and entrepreneurship, the value of value chain development, the importance of youth engagement, the need for technological interventions, the need improving productivity in plant and animal production, the need for capacity building in the post-harvest management of agricultural products and the importance of promoting export-oriented agriculture.
It has also carried out several interventions to achieve these goals, such as efforts to merge agriculture and entrepreneurship, focusing in particular on young people and taking into account crop and animal production and chain development. while promoting export-oriented agriculture are important interventions proposed to support agricultural development.
The financial allocation for the production of seeds and planting material to support cultivation and dairy production would lead to improved productivity, reduce foreign exchange leakage and strengthen the agricultural economy and the livelihoods of the farming community, proposals to build capacity on post-harvest technologies, including reducing food waste through proper packaging and using rail facilities where possible to transport fruit, vegetables and tea products, making the supply chain more efficient are important interventions to reduce food miles, food losses and food prices, implement a national food security program that takes into account the food system, and initiatives to develop a food safety bill as new law v ist to support the stabilization of the agricultural economy and to facilitate growth must be welcomed.
Former Central Bank Deputy Governor WA Wijewardena said it was more of a policy statement than a draft budget. With the exception of a few such as lowering the retirement age of public and private sector workers, all other policies will take more than a year to implement and therefore need to be pursued. This requires a mechanism to ensure their continuity. Since the government is notorious for not fully implementing budget proposals, we need to assess them ex post after one year to what extent they have been implemented.
The 2022 interim budget presented by President Ranil Wickremesinghe last week provided for the suspension of the purchase of fossil fuel vehicles to promote the use of electric vehicles only for the public sector, with the appropriate categories of vehicles to be decided based on efficiency and vehicle prices when purchasing vehicles for the public sector. Encourage the manufacture of electric bicycles to reduce the use of fossil fuels.
Tax breaks for imported accessories and parts needed to locally manufacture e-bikes with more than 50% added value.
An additional monthly allowance of Rs. 2,500 for pregnant women on top of the Rs. 20,000 already provided for them. Provision of Rs. 10,000 per family for an additional four months for approximately 61,000 food insecure families. Increase in monthly Samurdhi allowance between Rs. 5,000 to Rs. 7,500 per month for approximately 1.7 million families currently receiving Samurdhi. Increase in allowance for elderly, disabled and kidney patients from Rs. 5,000 to Rs. 7,500. National food security program to be introduced covering wide areas including improvement of production, the collection, storage and distribution of food, as well as the provision of food to those without the capacity, to ensure food security and implement the same as a national priority.
Rice farmers of two hectares or less who are in arrears with crop loan repayments from state banks as of May 31, 2022 due to crop decline, lack of fertilizers, agrochemicals and inputs , and abandonment of cultivation were 28,259. In a bid to empower the farmers and free them from debt burden, steps are being taken to cancel the outstanding loan amounting to Rs. 688 million (excluding interest) which is currently in default at state banks. The money to be written off will be repaid to the respective banks in two years in installments so as not to put additional pressure on the cash flow of the General Treasury.
VAT will be increased to 15% from the current rate of 12% from 1 September.
Compulsory tax registration for all residents over the age of 18 regardless of annual income and tax exemption thresholds.
Reduce the retirement age of employees in the public and parapublic sector to 60 years.
Previously, the government had decided to raise the mandatory retirement age for public sector employees to 65 and that of semi-public employees to 62.
Reactivate the Statement of Business Intent (SCI) process for the top 50 SOEs, excluding CEB, CPC and Sri Lankan Airlines, as they are undergoing various restructuring efforts, to monitor close to the objectives set.
A committee composed of three government officials including the Comptroller General of the General Treasury will be appointed to oversee and implement the entire process of disposal of waste materials accumulated in public sector establishments.
Allocation of a 20% stake in state banks to depositors and staff of these banks
• To meet confirmed recapitalization needs due to rising interest rates, rising NPLs, loan settlement issues experienced by businesses due to the economic crisis, and liquidity issues faced by state banks, it is proposed to allow 20% shareholding in Bank of Ceylon and People’s Bank by their depositors and staff.
• It should be noted that the government’s ability to provide additional capital at this stage to state banks is very limited given the lack of fiscal space.
Debt and debt management:
An Independent National Debt Management Agency (NDMA) will be set up to pay particular attention to public debt management.
Activities related to public debt management are currently carried out by the Central Bank of Sri Lanka, the External Resources Department, the National Budget Department and the Treasury Operations Department.
A national agency called the National Public Private Partnership Agency will be set up with the aim of identifying and facilitating investments to be undertaken in partnership with the public and private sectors, and it is proposed to allocate Rs. implementation of this proposal.