RW promises to prevent SL from relapsing into 2022 economic crisis

President Ranil Wickremesinghe 

• Says despite the challenges decisions made for the country are executed effectively
• Admits hiking VAT to 18% was challenging but driven by need to maintain economic stability
• Speaking at IDB National Industry Excellence Awards assures concessions for SMEs on bank loans

President Ranil Wickremesinghe on Wednesday emphasised the importance of making the right decisions for the country’s economic development during his address at the National Industry Excellence Awards 2023, at the Nelum Pokuna Theatre in Colombo. 

He acknowledged that the decision to increase VAT to 18% from 15% was a challenging one, driven by the need to maintain economic stability. 

President Wickrem-esinghe highlighted that true leadership involves being honest with the people and making decisions that benefit the nation.

He expressed confidence in the youth leadership within the Government and the group of young Ministers dedicated to working for the country. 

RW...

The President pledged to collaborate with them to improve the country›s economic situation by 2024.

Additionally, the President announced his intention to address bank loan concessions for small and medium-scale industrialists in the upcoming 2024 Budget, aiming to strengthen Sri Lanka›s export-oriented manufacturing economy. He said the National Industry Excellence Awards 2023, jointly organised by the Ministry of Industry and the Industrial Development Board, is a step towards achieving this goal.

Around 300 successful entrepreneurs were recognised and awarded in various categories, including platinum, gold, silver and bronze awards, out of a pool of over 4,000 industrial entrepreneurs who had applied to compete in 21 major industrial sectors and 61 sub-industrial sectors.

In his address, President Wickremesinghe said:

“As I observed the award recipients, it brought back memories of the challenges we faced last year. At that time, there were numerous uncertainties about the sustainability of our industries. The absence of electricity and the difficulty in obtaining bank loans had led to the closure of thousands of businesses.

“It›s truly remarkable to see a substantial number of individuals reinvigorating their industries and achieving success. Small and medium-scale industries have made a swift comeback in a relatively short period. However, some issues remain unresolved, particularly, concerning bank loans and market access. Our foremost priority is to address these concerns.

“In the upcoming Budget, we aim to introduce measures that provide bank loan concessions to support small and medium-scale industries. This program is progressing steadily. We have devised comprehensive strategies to revitalise our nation›s economy, engaging in discussions with both the International Monetary Fund (IMF) and our creditors.

“Our primary focus always revolves around our capacity to repay the loans we have taken. To achieve this, we must consistently increase our income year after year. Gaining the trust of private creditors and multilateral creditors is imperative to reassure them of our commitment to loan repayment. This commitment must be ingrained in our actions.

“A substantial portion of next year›s Budget will be allocated to debt repayment and interest. Failure to meet these obligations could push us back into the old, precarious situation. Therefore, safeguarding our currency and fulfilling our loan obligations is of paramount importance.

“In the past, when there was a budget shortfall, the solution was to instruct the Central Bank to print more money. However, this approach is no longer legally permissible and obtaining loans from banks has also become a challenge. These restrictions stem from the informal financial practices of the past.

“To ensure our financial stability in the coming year, we must significantly boost our income. We have set specific revenue targets that we must work diligently to achieve. It›s crucial for the country›s progress and to prevent bankruptcy in the near future.

“As a result of these financial constraints, we had to make the difficult decision to raise the VAT to 18%. This step aligns us with the practices in countries such as, India and Pakistan. Such decisions are never easy for any government. However, failing to take these measures would cast a shadow on everyone›s future. Therefore, making the right choices becomes imperative.

These decisions are necessary for the well-being of the country, even if they draw criticism from the public. Both, my Cabinet and I have willingly shouldered the responsibility of rebuilding our nation, which had faced economic collapse.

We made a deliberate choice not to revert to a state of dependency. Instead, we are committed to moving forward with our own strengths. Regrettably, during a Cabinet meeting held last Sunday evening, we had to make this tough decision. While some may point fingers, failing to act would risk returning to the dire circumstances of the previous year. At the start of this year, our economic growth rate was a negative 0.7%. Today, it has improved to 0.5%, with further progress expected next year. This leaves us with a fundamental choice of whether to advance or regress.

“This is the essence of leadership - the willingness to make difficult decisions and transparently convey the true state of affairs to the people. Through this decision, we can generate the much-needed revenue to support small and medium-scale industries by repaying loans to banks. Without this step, these industries would face collapse, which puts industrialists in a challenging position. Thus, these difficult decisions must be made for the betterment of the country, even if they invite criticism. Our focus should remain on the nation›s well-being.

“Regardless, let us embark on this journey with the resolute decision to rebuild our nation. This program offers us the opportunity to transform our country into a prosperous one, no longer dependent on external support. I hold strong belief in the promising future of this nation. We are in negotiations with international financial institutions, including the World Bank and while the path may be challenging today, I am confident we will reap positive results in the next two or three years.

“Looking ahead to 2024, I extend my best wishes to all, expressing our shared aspiration to bolster the nation›s economy further.” 

The event also featured addresses from Industry and Health Minister Dr. Ramesh Pathirana, as well as Ministers of State, Prasanna Ranaweera and Chamara Sampath Dasanayake. Notable figures in attendance included Secretary of the Ministry of Industry, Thilaka Jayasundara, Secretary to the Prime Minister,  Anura Dissanayake, Industrial Development Board Chairman Dr. Saranga Alahapperuma, and various ministerial secretaries, heads of government institutions, prominent industrial entrepreneurs and distinguished guests.