Thursday, June 1, 2023

Ceylon Chamber highlights need to focus on Implementation of Progressive Proposals in Interim budget 2022

The Ceylon Chamber of Commerce views the interim budget for 2022 delivered by President Ranil Wickremesinghe in his capacity as Minister of Finance, as a positive step towards rebuilding the macroeconomic framework of the country. The Budget provides an estimate of the expected revenue and expenditure of the Government for 2022 within an environment of high inflation and can be built upon towards meeting the aspired targets in the medium-term fiscal consolidation program.

The Chamber notes that several proposals it has submitted in the past relating to State-Owned Enterprise (SOE) reforms, trade reforms and strengthening of the financial sector have been prioritized in the budget speech. We underscore the need for meaningful SOE reform to be driven through the proposed SOE Restructuring Unit while also reestablishing the National Agency for Public Private Partnership, which could be a catalyst to attract FDI. The setting up of an independent National Debt Management Agency as announced, will also be vital in the management of public debt with greater transparency and governance. We also recognize that certain new areas of legislation will be looked at such as on bankruptcy while existing legislation like the Termination of Employment of Workmen Act will be reviewed. We look forward to play a meaningful role in these discussions towards such legislative reforms.

We recognize the priority given to exports and trade by revitalizing the National Export Strategy, implementation of a Trade Adjustment Programme to facilitate the phasing out of para tariffs as well as broadening of existing trade agreements. The Proposal related to the optimal use of railways for the transfer of agricultural products is also welcome and has been a key ask from the private sector for numerous years. The focus on providing more independence to the Central Bank through a new Act is also welcome. The proposal to facilitate the establishment of branch campuses of foreign universities through the BOI is seen as a step that can create more opportunities for local students while generating foreign exchange earnings by attracting foreign students.

We seek further clarity on the implementation of the revenue proposals which were announced in May 2022 as these need to be legislated soon if they are to become effective from the 1st of October as outlined in the interim budget.

While acknowledging the progressive proposals outlined in the budget speech, the key will be in terms of implementation which successive Governments have failed to carry out thereby reducing the credibility of the fiscal framework and the effectiveness of budget proposals. We request that there be greater accountability and transparency in the process of implementation, and we look forward to supporting the policymakers where possible to streamline the implementation process in line with best practice. We also request Government to look at ways to reduce unjustifiable expenditure as much as possible and direct it towards meaningful social protection programs or assist in meeting fiscal and primary deficit targets.

We hope that with the interim budget in place and implementation of the proposals outlined, it would be a catalyst towards reviving growth and eventually putting the country on an accelerated growth path. This is vital for the country to emerge from this crisis. The Ceylon Chamber as the premier Chamber and voice of the private sector will continue to support the policymakers in implementing progressive reforms. We hope with a sound fiscal framework in place it will pave the way to an eventual IMF program that would help stabilize the economy and mobilize financing to address the current shortfalls in external cashflow.

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