Treasury Secretary S.R. Attygalle yesterday wooed global investors and companies, showcasing a few major policy reform areas the Government has taken to realign Sri Lanka’s future economic outlook for the better.
Addressing Sri Lanka Investment Forum’s inauguration yesterday, he outlined major reform areas that includes; fiscal consolidation and revenue mobilisation, trade and investment regime and legal and judicial.
“It is fair to say that this Government is in a hurry to realign the economy into a growth path,” he added.
He said the new tax policy was investment focused, simple and competitive to facilitate investments in sectors with high potential for growth.
He also said the introduction of a new tax policy to stimulate growth and the decision to settle unpaid dues to large and SME companies amounting to almost 3% of the GDP helped the economy.
“Had that decision not been taken, the economy during this pandemic would have contracted by over 3.6% with the unemployment rate increasing to double digits. The decision helped SMEs to clear their dues to banks and restart their operations,” he said.
The Treasury Secretary also said the public sector will focus on domestic financing, while foreign financing from traditional bilateral and multilateral sources will prevail at around $ 1 to $ 1.7 billion per annum.
“We are also into non-debt creating sources to support the financing with around $ 1 billion going forward,” he said.
Noting that debt dynamics have shifted since 2019, Attygalle said foreign currency debt has reduced to almost 42% at the end of 2020 from nearly 50% in 2019, while the public sector debt is expected to be below 75% of the GD by 2025
The Treasury Secretary also said going forward a public investment program of around 5% to 5.5% of GDP in the medium term will be maintained.
“With the growth that we envisage is around 5% to 6% in the medium term, we can meet the revenue target of about 14% by 2025. Therefore the deficit of 4.5% by 2025 is very much a reality,” he said.
He said the revenue was only 9.6% of GDP in 2020 despite the pandemic.
On expenditure fronts, Attygalle said the capital investments will be carefully picked looking at their ability to expand the economy and their high multiplier effect.
In addition, he highlighted domestic manufacturing has also helped expenditure management.
He also said investment in digitalisation is also expected not only to ensure better delivery of service, but also better expenditure management.
Treasury Secretary assured to ensure COVID expenditure in health, while taking care of social safety nets.
In terms of legal reforms, Attygalle said rewriting of archaic laws, expansion of Commercial High Courts, introduction of Investment Development Court and introducing digitalisation of court procedures are already being implemented.
“Appointment of Deregulation Commission and introducing financial regulations and procurement procedures in Government will short circuit the delays in the system. The Strategic Development Law will also provide more concessions to investors making Sri Lanka more attractive. Most importantly we assure consistency in policy,” he said.
(FT)