6 September 2024 02:25 am Views - 963
The National Chamber of Exporters of Sri Lanka (NCE), ahead of the country’s upcoming presidential election, urged candidates to avoid making unrealistic fiscal promises that could jeopardise the nation’s fragile economic recovery.
With Sri Lanka still grappling with the aftershocks of a severe financial crisis, the NCE called for responsible leadership and caution in campaign rhetoric, particularly regarding pledges that involve significant wage increases and tax cuts.
“Election promises—such as tax reductions and significant wage increases—should be approached with careful consideration to avoid raising the risk of economic instability if these promises cannot be fulfilled,” the NCE said in a statement.
Several presidential candidates have proposed wage hikes of over 50 percent for the state sector. However, the NCE emphasised that such commitments could severely strain the country’s finances. Sri Lanka’s bloated public sector has long been a financial burden, worsened by past administrations’ ad-hoc employment practices aimed at fulfilling campaign promises.
“The financial burden of these practices is unsustainable, and the NCE urges all candidates to consider the long-term implications of further expanding the state sector without a clear, sustainable plan,” the Chamber noted.
The private sector, particularly exporters who are key to Sri Lanka’s economic revival, has been operating under significant fiscal pressure. Increased taxes, including higher PAYE tax rates, have placed a heavy burden on employees.
The NCE expressed concern that reversing these tax measures to win votes could create further economic instability.
“The business community, including our member exporters, has been operating under increasingly thin margins due to higher taxes and other fiscal challenges,” the NCE said.
This could lead to reduced productivity, job losses, and a decline in international competitiveness. Exporters, who contribute significantly to the country’s foreign exchange earnings, could also face difficulties in maintaining relationships with foreign clients if Sri Lanka is perceived as economically unstable, the Chamber added.
The NCE asserted that over-promising and under-delivering could ignite another wave of unrest, leading to instability that would affect every sector of society, including the vital export industry.
Accordingly, the NCE urged all presidential candidates to ensure that their policy proposals are economically feasible and aligned with the long-term needs of the country. Popular politics and short-term fixes could have devastating consequences for the country’s stability and economic prospects, the Chamber cautioned.
“Sri Lanka cannot afford to play popular politics during this critical period,” the NCE said, calling for candidates to communicate “accurately, honestly, and responsibly” with the public.
The Chamber emphasised that responsible leadership will be crucial in guiding Sri Lanka out of its current crisis, with the decisions made in the coming months likely to shape the country’s future for years to come.