Treasury Secretary calls on all Sri Lankans to rebuild economy

Treasury Secretary Mahinda Siriwardena

Treasury Secretary Mahinda Siriwardene on Tuesday insisted that every citizen must strive diligently to rebuild and put the economy on a stable trajectory beyond the International Monetary Fund (IMF) program.

Speaking at Asian Development Bank organised ‘Serendipity Knowledge Program’ which focused on Sri Lanka’s economic crisis, he said that Sri Lanka should strive to ensure that this is the last opportunity the country will ever seek IMF support.

Noting that Sri Lanka has progressed substantially from last year, with the implementation of corrective measures and monetary tightening, the Treasury Secretary emphasised staying the course to achieve sustainable economic development beyond the IMF program.

Siriwardena also said the tight expenditure controls and inflation helped Sri Lanka over-perform its primary deficit target for 2022 in an interim budget created ahead of the IMF program.

“Sri Lanka was asked to maintain a 4% primary deficit, but we ended with a 3.8% of gross domestic product (GDP) for 2022. However, this included lending to the Ceylon Petroleum Corporation of $ 700 million and had it not been there we could have ended about 2.7% of the GDP,” he added.

However, he said cash flow management remains a very tedious and challenging task without sufficient State revenue inflows. 

“We receive around Rs. 160 to 170 billion each month as tax revenue, but the State expenditure is around Rs. 193 billion. The State sector salaries are the biggest, which is about Rs.93 to 94 billion. Then another Rs. 30 to 35 billion is for pensions and social welfare Samurdhi payments. For services particularly for the health sector to import medicines we need about Rs. 7 to 10 billion,” he explained.

Despite the significant adjustments made to meet the revenue target, he said last year the Treasury saw a considerable tax revenue increase which was about 20% of the total revenue, amidst a very high nominal GDP. 

“We did not see a significant increase in tax revenue as a percentage of the GDP in 2022, but this year we have seen a considerable improvement especially indirect taxes like VAT,” he said.

The Treasury Secretary, however, was concerned if Sri Lanka would be able to make the annual revenue target, adding that it remains the main concern of the Government.

He also said steps are being taken to introduce the Public Finance Management Bill, whilst noting that the Policy Framework of the Government will be announced by the end of the month.