Friday Apr 19, 2024
Friday Apr 19, 2024
Wednesday, 13 March 2019 00:00 - - {{hitsCtrl.values.hits}}
The National Chamber of Commerce of Sri Lanka yesterday hailed Government efforts to maintain policy consistency and the ongoing reform agenda in the Budget 2019, while emphasising the need to maintain close monitoring on achieving the goals set.
The Chamber also expressed concern over the ambitious revenue targets set in the Budget, while raising doubts over the capacity of Government institutions to implement the proposals outlined in the proposal.
“We have certain concerns over institutional capacity to implement the proposals, this would be a challenge. The bureaucracy should be facilitated with necessary resources to ensure smooth implementation,” National Chamber Senior Deputy President Nandika Buddhipala told media. “We further raise our concerns regarding the effectiveness of the existing institutional capacity of the government to take on all the projects in track, and deliver the expected completion within short timeframe envisaged.”
The Chamber also cast doubt over the revenue targets of the Government, noting that the aim to increase revenue by over 20% was an ambitious goal, when compared to last year’s modest performance.
“We observe that the total Government revenue would need to increase over 20% compared to last year, in order to meet up with increases in the Government’s recurrent and investment expenditure, while keeping fiscal deficit at 4.4% of the GDP, which is a challenging target amidst a slow GDP growth trajectory. The expected interest payments as a percentage of total revenue will still be more than 35%, and the composition of indirect taxes as a percentage of total taxes also remained at a high level, even though we do not expect such parameters to be drastically changed within a one year horizon,” he said.
Buddhipala also appreciated the efforts by the Government to fund the Budget deficit through local sources, which may have negative effects on the market, while putting pressure on the interest rates.
Noting that such a shift to less dependence on foreign currency augurs well with maintaining stability in the exchange rate, he cautioned on the need to be conscious of local liquidity conditions and other ramifications.
National Chamber appreciated the allocation of Rs. 48,000 million on account of the Gamperaliya program targeted to infrastructure development in villages, proposal of Rs. 500 million on the Enterprise Sri Lanka scheme, which facilitates mobilisation of funds needed for young entrepreneurs at concessionary interest rates, together with the expected fund to be created through the Central Bank to provide guarantees to SMEs, where small entrepreneurs lack collateral needs for bank loans.
The Chamber appreciated the Government’s emphasis on developing post-war communities in the North and East as an investment in reconciliation, an aspect which has received little attention from the analysts.
Further, the Chamber was appreciative of the expenditure on agriculture and livelihood development through investment in the Moragahakanda-Kalu Ganga Multi-Purpose Project, allocating Rs. 12 billion and the expenditure on a host of welfare projects under the theme of Caring Society, including Rs. 24.5 billion for housing needs of low income groups in urban, rural, and estate areas, as well as in the North and East, and the increase in allowances paid to differently-abled individuals.
While commending the investment in the education sector, Buddhipala noted that the investment would have been better utilised if it was focused on developing technical skills.
The National Chamber welcomed the tax concessions proposed on investments of different scales, but however emphasised the need to improve the country’s economic climate as a key feature to attract foreign investment.
“We stressed that it is an imperative to further improve Ease of Doing Business, Global Competitiveness Index, Index of Economic Freedom, Global Corruption Perception Index and Logistic Performance Index, in order to reap the full potential of making such investments a reality,” Buddhipala said.
Further, the National Chamber also noted the need to iron out anomalies in the new tax concessions, to ensure that small and medium enterprises, which are mainly managed as sole proprietor or a partnership, are also eligible.
“As per the proposals, the tax concessions given to certain industries are only applicable to companies; however, we have a lot of individuals in business in those industries, and I think the concessions should be extended to this as well,” Gajma & Company Partner N. Gajendran explained.
