More than Rs.3,489 billion is required in the next two years for debt servicing, Prime Minister Ranil Wickremesinghe told Parliament yesterday, also highlighting that the Government has put in place a prudent debt management strategy to overcome the unprecedented challenges in the fiscal front.
The Prime Minister making his pre-budget Economic Policy Statement for the third consecutive year, said in plain that the country has to pay Rs.1,974 billion in 2018 and Rs.1,515 billion in 2019 for public debt serving based on the outstanding debt as at end of August 2017.
“Our target is to reduce the current debt which is 79.3 percent of the GDP to 70 percent of the GDP by 2020. We expect to maintain the budget deficit below 3.5 percent by then. We will strengthen the Fiscal Management Responsibility Act affirming our commitment towards fiscal consolidation,” the Prime Minister explained.
The Premier said a new Fiscal Liability Management Act that provides legal framework for a prudent debt management strategy will be introduced shortly.
“Our policies will be targeted on forward-looking liability management strategies. Accordingly, the funds required by the government will be raised with transparency and predictability,” the Premier stated, while highlighting that a comprehensive secondary market trading platform and a liability management fund would be introduced shortly.
“With reforms such as the new Inland Revenue Act, Foreign Exchange Act, Fiscal Liability Management Act, Corporate Intents of the State Owned Enterprises and close monetary-fiscal coordination, we will steer this country towards robust and judicious management of our financial resources and fiscal framework,” the Prime Minster commented.
He told the House that the proposed Free Trade Agreements with Singapore, China, and India were making great progress, adding that those agreements would give a massive boost to the economy by opening huge new markets to our entrepreneurs.
“The government will be formulating “a trade adjustment package”, said Premier Wickremesinghe, adding that the preliminary steps in that regard have been taken by enacting the Inland Revenue Act and the Foreign Exchange Act, and moving forward with the Anti-Dumping Bill.
“We are also formulating a new National Export Strategy and a new National Trade Policy. The government is also establishing a National Single Window for Trade facilitation, and creating a new development bank for development financing with an export-import window,” he noted.
The Premier also emphasised the need to attract more Foreign Direct Investment and Local Private Direct Investment in high-value products for the export-led economic strategy to be a success.
“The Government has initiated investment climate reforms with the aim to raise Sri Lanka’s Ease of Doing Business ranking from 110 in 2017 to 70 by 2020,” he pointed out.
The Premier also explained that the Government plans on initiating Public-Private Partnerships (PPP) to widen investment opportunities in the education, health, electricity, roads and highways sectors. “Accordingly, the government will formulate a clear PPP policy with a well-defined legal, regulatory and institutional framework to attract private players with the requisite capacities. Potential areas for expanding PPP include healthcare, leisure, tourism, education, ports and aviation, transportation, highways, information and communication technology, and energy,” he told the House.
Focusing on the private sector contribution to uplift the economy, Wickremesinghe said the effort of his government is to “create an economy firmly based on foreign and domestic private investment, driven by a dynamic and forward - looking private sector”.
The Premier, pointing out that the Government pursues a knowledge-based, highly competitive, social market economy, underlined the need to diversify our export basket to make this vision become a reality. “For decades, we have relied on the same exports products such as garments, rubber, and tea. But now, we should diversify our exports by adding value added goods and services,” he remarked.
Prime Minister Wickremesinghe pledged that his Government would strive for increasing and improving jobs and raising incomes and expanding the middle class. “The government is planning to formulate policies to have a balance between the needs of foreign employment and the domestic labour market. As the first step,labour shortages in the market will be filled. Foreign employment will be promoted only when the earnings are high and, only when the earning opportunities are available for skilled workers,” the Prime Minister noted. The Premier, pointing out that 60 percent of the employed population is in informal and illegal economic activities, said that a contributory pension scheme would be introduced for those who are employed in the informal sector. “This will result in minimizing the likelihood of poverty after retirement” he added.
The PM also stressed the need to increase women participation in the labour market, and proposed to improve public transport, the private sector maternity benefits and access to tertiary and vocational education facilities.
Envisaging on building a strong economy, the Premier said, “We are building a well-planned Expressway system from Hambanthota to Kandy. We have obtained funds for that. We started a joint venture in the Hambanthota Port this year. Discussions are being held to start a joint venture in Mattala Airport as well. We have started working on Hambanthota economic zone. Millaniya Trade Zone has been planned already. Wayamba Industrial Zone has also been planned. The constructions of those zones will commence next year”. “The construction of the first stage of the port city which will be developed as a Financial City is nearing completion. We will develop the Kandy City by joining hands with the Japanese government. India and Japan are extending their assistance to construct LNG plants. Tourism Zones in the Southern have been planned. Budget 2018 which will accelerate these programmes will be presented in Parliament next month. The Budget will provide the opportunity to extend the development which was limited to the Western Province, to all other provinces including the Southern, North-Western and Central Provinces.”