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SRILANKA-TAXATION-DEBT-IMF
Sri Lanka parliament finally approves 2019 budget
COLOMBO, March 13, 2019 (BSS/AFP) – Sri Lanka’s parliament on Tuesday
approved the cash-strapped country’s 2019 budget, which had been delayed by
four months due to a power struggle triggered by President Maithripala
Sirisena dismissing the premier.
Finance Minister Mangala Samaraweera secured an absolute majority in the
225-member house despite threats from the opposition to defeat the budget and
topple the government.
Samaraweera on Tuesday eased some of the import restrictions on vehicles
for government servants, saying the country’s foreign exchange reserves had
improved since the crisis.
The budget was due in early November, but it was scuttled when President
Maithripala Sirisena sacked his coalition government on October 26 and
sparked an unprecedented power struggle.
It was originally due to be unveiled on November 5.
With no spending approved by parliament by the start of 2019, the country
was on the brink of defaulting on a $1.5 billion foreign loan repayment due
in January.
However, the supreme court intervened and restored the government, which
rushed through an interim budget in December to clear the way to meet its
foreign debt servicing obligations.
Samaraweera told parliament that confidence in Sri Lanka’s economy
suffered a serious blow due to the power struggle, and a massive amount of
foreign capital left the country during the political crisis.
“The damage to the country’s economy during those 52 days is
immeasurable,” Samaraweera said. “Over a billion dollars in foreign capital
left the country at the time.”
Sirisena is now in an uneasy cohabitation with his estranged Prime
Minister Ranil Wickremesinghe.
The crisis led to three credit downgrades for Sri Lanka, making
international borrowing more expensive for the island. However, the
International Monetary Fund earlier this month revived a $1.5 billion bail
out as the government consolidated its hold on power.
Unveiling the delayed budget a week ago, Samaraweera sharply raised taxes
on alcohol, tobacco and gambling to pay for public sector salary increases
and subsidised loans for small businesses.
He denied that concessions were aimed at national elections due later this
year.
Sri Lanka’s economy grew by just 3.0 percent last year — the slowest
expansion in 17 years — according to the Central Bank of Sri Lanka. The IMF
said it expected Sri Lanka’s growth to improve to 3.5 percent in 2019.
BSS/AFP/HR/1045