Govt. revenue goal challenging amid slow GDP growth trajectory: National Chamber

From left: NCCSL Secretary General and CEO Bandula Dissanayake, NCCSL President Asela De Livera, NCCSL Senior Deputy President Nandika Buddhipala, Gajma and Company Partner N. Gajendra and NCCSL Deputy President Deepal Nelson
Pic by Damitha Wickramasinghe

By Harshana Sellahewa
The National Chamber of Commerce of Sri Lanka (NCCSL) observed that it’s challenging for the government to increase total revenue by 20 while keeping the budget deficit at 4.4 percent of Gross Domestic Product (GDP) this year amidst a slow GDP growth trajectory.

The budget 2019 estimates the economy to grow gradually from 3 percent in 2018 to 4.8 percent by 2024. 

“The expected interest payments as a percentage of total revenue will still be more than 35 percent, and the composition of indirect taxes as a percentage of total taxes also remained at a high level, even though we do not expect such parameters to be drastically changed within a one year horizon,” NCCSL Senior Deputy President Nandika Buddhipala told a post-budget forum organized by the chamber yesterday. 

He said that the chamber noticed the significant shift in financing the fiscal deficit through heavy dependence on domestic sources with significant debt repayment in foreign currency running into Rs.655 billion during 2019.

“We believe such shifts of less dependence in foreign currency will work well with maintaining stability in the exchange rate. However, we need to be conscious of local liquidity conditions and other ramifications as well,” he added.

Buddhipala commended the approaches and allocations made through the budget 2019, saying that although the budget was made in a rush due to political instability over the past, if implemented properly, the benefits could be reaped by the country.

The chamber highly appreciated the allocation of Rs.48 billion on account of the ‘Gamperaliya’ programme targeted on infrastructure development of villages and the allocation proposal of Rs.500 million on the ‘Enterprise Sri Lanka’ scheme which facilitates mobilisation of funds needed for young entrepreneurs at concessionary interest rates, with the expected funds to be created through Central Bank to provide guarantees to SMEs where small entrepreneurs lack collateral for bank loans.
Meanwhile, NCCSL President Asela De Livera stressed that the proposals in the budget also emphasise on promoting exports. He said that many new loan schemes have been established to encourage exports through SMEs.

He also noted that the two main factors attracting foreign direct investments (FDIs) into the country are its geographical location and human capital.
“We have to draw FDIs on these two aspects because our main plus point is the human resources of this country. 

Therefore, the budget allocated many loan schemes such as Enterprise Sri Lanka so that the country will be developed in a way making maximum utilisation of what we have,” De Livera said.

He also added that the budget has considered the empowerment of women and encourages the employment of more women in industries.