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Confusion reigns supreme in economic direction

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Despite the newly installed government marking the end of 100 days on April 23, there have been serious lapses in transparency along the way while questions have only confounded on the economic front, fueling uncertainty, business community analysts said last week. Although the interim Budget presented in Parliament on January 29 was a populist one with many price reductions on ‘essential’ goods, the government is yet to clearly explain how it would realistically raise revenue to fulfill its pledges without adding pressure to the budget deficit.

 “Still to date, there has been nothing gazetted on how the Super Gain Tax will take effect, the levy on telecommunication companies is to be calculated or how the taxable income threshold is to be increased. There is no clarity on how the reduction of fuel prices is to be borne by the distributors or how the alcohol industry is going to be affected,” an analyst who did not wish to be quoted said.

On the other hand, the analyst noted that whilst the Finance Minister had been alleging that economic growth and debt statistics provided by the previous government were distorted, the new government is also yet to conclusively explain the exact adjustments on the distortion they would make.

“On the Treasury bond issue, the report by the three-member committee is in contradiction with what was mentioned in a statement in Parliament by the Prime Minister. The committee’s report is far from convincing because it has not investigated what it ought to have, i.e. given the unusual bidding pattern adopted by Perpetual Treasuries, whether the Governor’s family connection had led to insider trading,” another analyst said on the condition of anonymity.

The analyst noted that although it is commendable the report on the SriLankan Airlines was made public the government is, however, yet to make public, the report on the consolidation of the financial sector submitted to the Prime Minister by a team headed by former Commercial Bank Chairman Dinesh Weerakkody.

“There is also confusion surrounding the Port City project, as some legislators are of the view it has to be scrapped while others want it to continue. This has only escalated the extent of uncertainty in the economy at present prompting the business chambers to call for early elections. The government has clearly not been transparent on many aspects. For example, we don’t know what the economic growth was in the first quarter of 2015, the fiscal deficit, status of the infrastructure projects initiated by the previous government, foreign direct investments, etc,” the analyst said pointing out that the regime which regularly touts plans to pursue structural reforms, put in place soft infrastructure, create 1 million jobs in 5 years and double the income of the people, is however yet to come up with a clear economic roadmap on how it would implement its plans.

Last modified on Tuesday, 28 April 2015 14:51
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