President Ranil Wickremesinghe said that the government is looking at removing the para-tariffs and the tariffs over five years, with a trade adjustment programme to help industries and manufacturers meet competition, adding that from the government side discussions have been initiated with the World Bank and the Asian Development Bank (ADB).
He said that now it is up to the private sector to decide how they are going to relate to it. He said that the private sector would have to decide whether they are going to put up the red flag of protection and take the government on or if they are going to open up.
The President said this addressing the Post Budget Forum 2023, “Hurdling towards Opportunities- beyond Challenges” organized by the Colombo University MBA Alumni Association which was held at the Shangri-La Hotel in Colombo yesterday (18). The President, as a Colombo University Alumni, was the first to present a budget. He said that Sri Lanka‟s strategic location should be made use of to enhance the country‟s economic prospects. He called for the completion of the East terminal to promote the country as a logistics centre that can be expanded up to the North Port, which will be from Mutwal up to Ja-Ela. He added that if the country is to be brought out of the current predicament, not only the government, but the private sector and the people also have a big role to play. He said that the government should handle the task of providing for the people and focusing on the health, education, housing and welfare sectors. Running businesses, he said, should be handled by the private sector. President Wickremesinghe noted that the government cannot get involved in running businesses.
“We were thinking of policies not of practical results. When I took over as Minister of Finance, my first task was to stabilise the economy. The measures necessary have been contained in the August budget”, the President said.
He said that the legislative process will also start. “In addition to this, while we commit to a staff-level agreement, now we have to negotiate with our main bilateral creditors. We are again unique in that two of our creditors are not members of the Paris Club. We are negotiating at the moment both with India and with China. Once those negotiations are completed, and I believe it will be done successfully, then we have to talk to the private creditors and go back to the board. So that process is known and we are carrying it out”, he said.
The President said that the results of the measures we took in August will be known in the first half of next year. “ . The stabilization measures will be a four-year one, ending in 2026. By that time hopefully, our GDP will be back to what we were in 2019.
“I still don’t know what will happen. However, how do we go beyond that? Are we satisfied with the system? Can we start borrowing again and getting into the same crisis in another ten years‟ time? The only difference is that we may go to the IMF before the crisis hits us”.
He said that the government expects to achieve many goals through the social market economy or the social security open economy.
“Economic growth of 7 to 8%. Increasing international trade as a percentage of GDP by more than 100%. Annual growth of USD 3 billion from new export from 2023 to 2032. Foreign Direct Investment of more than 3 billion USD in the next ten years. Creating an internationally competitive workforce with high skills in the next ten years.”, he said.He added that the government’s fiscal stabilization programme envisages government revenue increasing to around 15% of GDP by 2025 from 8.3% of GDP by the end of 2021. The Government is targeting a primary surplus of more than 2% of GDP in 2025 and expects to improve from this level thereafter.“We aim to reduce public sector debt from 110% of GDP at the end of 2021 to not more than 100% of GDP in the medium term. It is expected that inflation will be brought back under control in line with this. Interest rates are also expected to gradually reach a moderate level.
Once macroeconomic confidence is re-established and foreign exchange reserves are replenished through foreign finances, the adverse pressure on the exchange rate is also expected to abate.
The President added that the country’s strategic location is also a means of enhancing our economic prospects. “Firstly our location says we should be a logistics centre with three good harbours and a small one in Kankesanthurai. We are not talking about it. We are just thinking about it. Last time when I was Prime Minister, I wanted to push it forward. We had an agreement on the East Terminal with Japan and India. We cancelled it. It is still lying there. The port is unable to run. We haven’t the money. As you know, our shipping trade is under threat. However, let us open up there and let’s go all out.
Finish the East Terminal and promote ourselves as a logistics centre that we can expand next from there to the North Port, which will be from Mutwal up to Ja-Ela.
We can then be the feeder port for Pakistan, India, and Bangladesh. We had the Hambantota port. When the Belt and Road are complete, the Hambantota Port will link to several Chinese ports, which have been built by Chinese companies in Africa and some of the other ports. Look at the opportunities we have. And now we are looking at the Trincomalee Port to work with India, which will service the Bay of Bengal. “We want to start cruises in the Bay of Bengal, which goes from Trincomalee or Colombo to the Andaman islands which can go across to Myanmar and Thailand, Andaman Sea, across to Malaysia and ends up in Singapore. Just imagine the immense potential. A large middle class from China, India, Pakistan, Bangladesh and Southeast Asia. Well, that has to be tapped. We have to move out. So we are now looking at new types of industries, nano-technology, and even manufacturing”, he said.
He said that the government is also looking at removing the para-tariffs and the tariffs over five years, with a trade adjustment programme, to help industries and manufacturers meet that competition. “But beyond that, the Singapore FTA will be in operation by early 2023. Then the FTA with India, Thailand, and China. But the long-term goal is by next year or the year after, to agree with the Regional Comprehensive Economic Partnership.