- Govt. focused on keeping public finances steady despite revenue challenges
- PM replies to query on status of economy by SJB MP Ranawaka
- Says SL economy faring better than many other countries amidst COVID-19 challenges
- Cabraal says the stimulus package given by Govt. helped economy pick up after lockdown, satisfied with performance
- Govt. dedicated to keeping simplified taxes and biz-friendly measures
- Faults previous administration for growth slowdown
By Chandani Kirinde
Prime Minister Mahinda Rajapaksa
Sticking to pro-growth policies, Prime Minister Mahinda Rajapaksa yesterday told Parliament the Government’s focus was on keeping public finances on an even keel, while maintaining a simplified tax system for the private sector to capitalise on positive growth achieved in the third quarter.
“Sri Lanka’s economy has fared better than many other countries in the world in the wake of COVID-19 in 2020, with an economic growth rate of 1.5% in the third quarter and an overall contraction of 3.9% for the entire year. This was achieved despite the average global economic contraction being 5%,” Rajapaksa said in response to a question raised by Samagi Jana Balawegaya (SJB) MP Patali Champika Ranawaka during the PM’s question time.
He said that despite the COVID-19 outbreak in the country in March, the Government has managed to keep the economy afloat and provide the necessary funds for the health sector. He also stressed that the Government had proactively introduced several measures, including slashing taxes in late 2019 to meet initial projections of 4.5% growth for 2020, but those plans had derailed due to the pandemic.
However, Rajapaksa, who is also the Finance Minister, backed moratoriums and other measures introduced by the Government to assist the private sector, insisting they had helped the economy weather the COVID-19 impact and provided the impetus for growth of 1.5% in the third quarter.
The Prime Minister pointed out this was the first positive growth recorded by SL after successive negative growth in both the first and second quarters.
In the first three months of 2020, SL’s growth contracted 1.7% and in the subsequent quarter growth shrank 16.3%. Growth numbers from the fourth quarter are yet to be released by the Census and Statistics Department, but the Central Bank on Monday said growth is estimated to have contracted 3.9% last year.
“At a time when the entire world has been derailed by the COVID-19 impact, our Government has worked to improve the business climate and provide support to the economy. As a result, we saw the growth rebound during 3Q and we will continue to provide assistance for swift economic recovery. The focus will remain on maintaining a simplified tax system that companies will find easier to adhere to,” Rajapaksa said, tabling data on public revenue during last year.
State Minister of Money, Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal also replied to the query by Ranawaka on the status of the economy saying that while the former Government had estimated revenue collection of Rs. 2200 million in 2019, only Rs. 1800 million was collected in tax revenue.
“When the new President took office in November 2019, he had to take a new look at the economy, as the previous Government’s policies were a failure, and we decided to give a stimulus package and taxes were reduced to revive the economy. We had to face a setback in the second quarter due to the COVID-19 outbreak, but in the third quarter the economy picked up due to the stimulus package.”
He said the country was under lockdown for 66 days in the second quarter, where there was progress in the agriculture sector.
“Once the lockdown was over, we saw an economic growth of 1.5%. We are happy with this situation,” he said.