Central Bank Governor and Treasury Secretary outline Govt. recovery plan at CA Sri Lanka’s Budget Seminar

From left: BDO Partners Partner – Tax Services Sarah Afker, Aitken Spence Hotels Managing Director Susith Jayawickrama, Hemas Maritime Cluster Director Mushin Kitchilan, Saaraketha Holdings Managing Director Prasanna Hettiarachchi, CA Sri Lanka Faculty of Taxation Chairman Sulaiman Nishtar, CA Sri Lanka President Manil Jayesinghe, Treasury Secretary S.R. Attygalle and Brandix Group Group Financial Director Hasitha Premarathne

Secretary to the Treasury S.R. Attygalle delivering the guest speech

Central Bank Governor Ajith Nivard Cabraal delivering the keynote speech

CA Sri Lanka President Manil Jayesinghe delivering the welcome speech

The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) organised the Annual Budget Seminar where top Government officials and business leaders came onto a single platform to share their views on the Government’s National Budget for 2022. 

The keynote speech was delivered by Central Bank Governor Ajith Nivard Cabraal who outlined the Government’s recovery plan despite the challenges the country has encountered due to the COVID-19 pandemic. 

“Last year Sri Lanka recorded a negative growth of 3.5% and this year we are expecting it to be around 5%, but next year if we can get the growth to rise to above 5 to possibly 6%, I think Sri Lanka will be well on its path to recovery,” he told a large number of participants including chartered accountants who connected with the event virtually. 

Cabraal highlighted the need to take sustainable decisions going forward such as focusing on non-debt inflows and move towards government-to-government loans and central bank-to-central bank swap arrangements which will be more sustainable to the country. 

He explained that due to COVID, the country suffered revenue shortfalls, which had been difficult to recover from. Further, due to the various measures taken by the Government in relation to the pandemic, the Government had been put under pressure. Elaborating further, Cabraal said that the vaccination procurement, delivery and purchasing of vaccine had been challenging in the global context. “Even though the people got it free, the Government had to make a massive investment towards this,” he said. 

Guest speaker, Secretary to the Treasury S.R. Attygalle provided a fiscal overview at the seminar, while also disclosing that the Government was hoping to bring down the budget deficit to around 4.8 to 5% by 2024, so that the debt stock will be around the 75 to 80 range, which is currently above 100. “If you look at our history, only in 1953/54 we had a surplus budget, otherwise throughout we have had a deficit,” he explained. 

Attygalle said that during the last two years the deficit had gone up to double digits, and most likely it would be around the double digit range this year too. “The plan is to bring it around to 4.8 to 5% by 2024.” 

He also highlighted that the Government had made a considerable investment amounting to 1.5% of the GDP to curtail the COVID pandemic in an effort to bring the country back to normalcy. 

CA Sri Lanka President Manil Jayesinghe said that as a habit everyone always tended to focus on the revenue proposals, but there were other proposals in the Budget which showed the direction the Government was moving towards. “There are also certain initiatives they are taking which will create new opportunities for the business community,” he added. 

The seminar also featured a panel discussion comprising Brandix Group Group Financial Director Hasitha Premarathne, Hemas Maritime Cluster Director Mushin Kitchilan, Saaraketha Holdings Managing Director Prasanna Hettiarachchi and Aitken Spence Hotels Managing Director Susith Jayawickrama. During the discussion, representatives from the various industries shared their thoughts on the Government’s Budget 2022.

Sharing his views, Premarathne highlighted the need for the Government to encourage more transformation to ensure the industries including the apparel industry continue to remain competitive at a global context. He also called for better relief mechanism especially for the benefit of the SMEs sector which will encourage them further to play a bigger role and contribute more to the economy.  

While highlighting that the Government’s policy shift towards organic fertiliser was encouraging, Hettiarachchi underscored that it was prudent to approach this policy shift pragmatically. “It’s a large shift, and the strategy needs to be supported. I hope the budget is looking at allocating significant funding for the areas of fertiliser as well as for alternatives in pesticides and weedicides.” 

He also said that the best way forward was to make all these requirements locally by attracting the best world class products through joint ventures. 

Speaking on behalf of the tourism and hospitality industry, Jayawickrama called on the Government to consider providing some sort of a lifeline or a debt restructuring mechanism. He expressed disappointment that the Government had failed address this in the Budget specially as the tourism sector has been suffering since 2019 following the Easter Sunday attacks.

“Most hotels are sitting on a mountain of debt, and severe liquidity issues. A lifeline is critical for the industry because if not, the products we offer will deteriorate and it will have long term repercussions on Sri Lanka as a product in the world market,” he warned. 

Welcoming the Government’s proposal to promote Sri Lanka as a maritime hub, Kitchilan however highlighted that much needed to be done to achieve this.  According to him, Sri Lanka must first invest in infrastructure upgrades, as at present there are infrastructure limitations even in the bunkering industry. “We have storage capacity for low sulphur, but lot of ships need high sulphur fuel. So, we need to develop this infrastructure by immediately implementing floating storage as opposed to land based storage,” he said.  

“Another area would be to focus and implement international standards and technologies if we are to build the confidence of global shipping lines. The regulator has a major role to play in monitoring the strict compliance of these standards, once implemented,” he added. 

CA Sri Lanka Faculty of Taxation Chairman Sulaiman Nishtar moderated the session, while BDO Partners Partner – Tax Services Sarah Afker presented the budget highlights.