Apr 22, 2016 (LBO) – Sri Lanka will move ahead with development projects that generate revenue while strengthening accountability of state institutions to Parliament, a government minister said.
State Minister for National Policies and Economic Affairs, Niroshan Perera, spoke to Lanka Business Online on several aspects of policy.
Projects such as the Mattala airport and Hambantota harbour will be developed to generate revenue, he said.
“If you take large-scale infrastructure projects such as the Mattala airport and the Hambantota harbour, we have to tie them to income generating activities. So, that is why we have talked with the Chinese,” Perera said.
“We are in the process of having a large industrial zone in the Hambantota area. With that zone, connecting the airport for cargo as well as Chinese tourists and other tourists will be a boost to the Sri Lankan economy.”
Sri Lanka’s current government, which took office last year, appears to have better plans to improve accountability of state enterprises and increase transparency compared with its predecessor. This could be a crucial step in improving public information and stemming losses at state enterprises.
Nevertheless, senior-most politicians of this government are often long on plans and hurling accusations, and short on evidence to back it up, which does not improve public dialogue.
Accountability to Parliament
Perera believes there is a firm push to improve accountability of state enterprises.
“We have to rectify some of the large number of institutions that are bleeding. In terms of responsibility we have presented all these things to Parliament,” Perera said.
“COPE and COPA have been strengthened,” he added, referring to the Committee on Public Enterprises, and Committee on Public Accounts, which have members of the opposition sitting in them.
Rather than report to Parliament every two years, some heads of state institutions have been called frequently to report on progress, he said.
Although the State Minister didn’t provide details, he said Sri Lanka’s debt may be as high as 10.5 trillion rupees. This likely includes debt of state enterprises.
Given that the island’s state enterprises have always been in debt, it isn’t immediately clear whether this adversely impacts the government’s debt ratios.
The loss leader is Sri Lankan Airlines, and Perera said a review is taking place of orders placed for aircraft.
Some of the new aircraft could manage long haul flights to North America, while the longest routes SriLankan managed previously were to Europe.
“There is a review going on whether we need that type of aircraft. Based on that the government will take a decision. Ultimately we are competing with other more efficient airlines,” he said.
A private investor is one of the options they were considering in terms of restructuring it, he added.
“As a new government we are faced with restructuring all these institutions, we have to transfer the debt. Even if you are going for a private-public partnership, I don’t think private sector institutions will take the debt.”
A flagship project will be the Port City, and the government is putting the finishing touches on an agreement.
“We are still negotiating what the exact size is going to be, next month we will have a new agreement with the company which is doing the Port City. It won’t be expanded,” he said.
Raising tax revenue
In terms of government revenues, Perera said essential items would be exempt in a planned VAT increase to 15 percent in May, and they would try to minimize the impact on the public.
A slowdown in exports had affected government revenue, but there were plans to increase revenue over the next few years.
“We believe that the high society should pay their fair amount of taxes,” Perera said. Sectors such as tourism had potential to provide more revenue to the government, he added.
Another source of revenue could be money hidden abroad.
“Individuals have been taking money out of the country. First thing to do is have very good anti-corruption measures. We need those institutions. We hope especially Parliament will take a lead in this.”
“The Prime Minister’s decision is to make the Parliament the key area where all these decisions will be made public.”