Maintaining single-digit inflation has boosted business confidence: Semasinghe

State Minister for Finance Shehan Semasinghe

State Minister for Finance Shehan Semasinghe yesterday emphasised that the sustained single-digit inflation has significantly contributed to fostering business confidence in the country.

Addressing a press conference at the Presidential Media Centre (PMC) themed ‘Collective Path to a Stable Country,’ Semasinghe disclosed that the state revenue accounted for 11.2% of the Gross Domestic Product (GDP) in 2023, with projections indicating an anticipated increase to 15% by the year 2026.

Semasinghe, provided insights into the economic landscape, stating that the country achieves a 1.7% economic growth in the third quarter of 2023. He highlighted the notable recovery, noting that the overall economic growth for the year 2023 is anticipated to be approximately -3%, a marked improvement from the -11% recorded in 2022. The balance of the primary account, which was negative at Rs. 895 billion in 2022, has now turned positive, standing at Rs. 333 billion as of November 2023.

Furthermore, Semasinghe informed that, with the receipt of the second tranche from the International Monetary Fund (IMF), foreign reserves are projected to surpass $ 4 billion. This includes contributions of $ 337 million from the IMF, $ 220 million from the Asian Development Bank (ADB) and $ 250 million from the World Bank (WB).

The successful maintenance of inflation within single digits has been pivotal in fostering business confidence, especially considering the significant reduction from 70% in 2022 to an anticipated 5% in 2024. This achievement stands as a cornerstone for building trust in the country’s business environment.

In terms of state income, it is anticipated to reach Rs. 3110 billion in 2023, surpassing the revised estimate of Rs. 2850 billion. This would represent a state income of 11.2% compared to GDP. Ambitiously, there are plans to propel this figure to a 15% growth by 2026.

The country has witnessed a noteworthy upturn in the number of tax files, reflecting a positive trend in tax compliance. In 2019, the total number of registered taxpayers stood at 1,705,233. However, owing to various policy decisions, this figure decreased to 677,613 in 2020 and further to 507,085 in 2021. Demonstrating a commendable success in policy implementation, the number of tax files rebounded from 437,547 in 2022 to a significant milestone of one million.

Upon assuming office, the current Government inherited unpaid bills exceeding Rs. 350 billion, a challenge that has now been effectively addressed with the settlement of all outstanding amounts.

Additionally, the Government achieved the noteworthy milestone of settling bills for all approved projects by 15 December 2023. Going forward, a principled commitment has been established to ensure that payments are not delayed by more than one month, starting from 2024.

Furthermore, in the coming year, the Government is set to initiate the ‘Aswesuma’ application process, starting at the end of January or the beginning of February 2024. The December instalment for 1,410,064 beneficiaries has already been disbursed, and the Government aims to extend these benefits to a total of two million people. Rigorous efforts are underway to identify eligible recipients and rectify any shortcomings observed in the benefits distribution process from the preceding year, demonstrating the Government’s commitment to effective and targeted support.