Uphill task to bridge budget deficit:

Ravi K blames former govt

by Dhaneshi Yatawara

Finance Minister Ravi Karunanayake

With more discussions still continuing in the Ministry of Finance over the 2016 Budget, Minister Ravi Karunanayake said that all measures have been taken to present a budget to actualise the promises the Government made to the people.

In an last minute interview with Sunday Observer Finance Minister Karunanayake said, “Detractors are on a trip of their own but none of what they speculate will happen.”

Excerpts:

Q: Further widening of the budget deficit of 6.9 percent of the GDP this year is speculated with the escalation of expenses on the railway and water works projects which is estimated to be around Rs. 70 billion. How is the Government going to find money to bridge the gap?

A: This is not the rate we were hoping to have. In reality this is inherited from the previous Government and it is obvious when you observe the last financial year and this year and we have to continue even in 2016 which is the fresh year. Our actual budget deficit will be revealed at the budget statement. Fixing the budget deficit will be an impossible task.

We will look in to an innovative approach – of course it will be both domestic and foreign. The approach would be different to what would be the general expectation. We will do something unique.

People love to speculate. But we will take decisions in this budget to actualise the promises we made to the people. Detractors are on a trip of their own but none of what they speculate will happen.

Q: Prime Minister Policy Statement clearly made out that one-off taxes proposed in the previous (budget) – i.e. super gain, mansion and casino taxes – would be done away with. How would you propose in implementing Prime Minister’s proposal?

A: One-off tax means it is over after the payment. It will not be applied a second time. It will not continue.

According to what I know, those who went to Saint Kitts and Nevis a few years ago for a sports bid in the name of a private company named after Hambantota, and spending billions of rupees are the ones seriously commenting worried over these taxation issues. Yet no questions were raised against them. Those are the very people who were a reason for the impact people felt with high taxes. Tax payers have subsidised for them.

Q: The International Monetary Fund (IMF), issuing a statement, denied making promises to Sri Lanka stating that there were no requests for assistance from Sri Lanka. What is your comment?

A: Nobody said that there was a request. Why should we worry about a comment. We had bilateral discussions with IMF officials during official foreign visits. We can not make every discussion public. But one thing for certain - we shall not let in any foreign dictation to run our budget. We are doing what is good for our people. We are not letting multilateral agencies to dictate us.

Q: You announced that it would be a revolutionary budget that would bring surprises to people. What do you mean by that?

A: You will see it soon. It will definitely not burden the people. They are already burdened.You cannot push any more. We have not taken the traditional approach.

Q: Is the Government going to restrict importation of vehicles, particularly cars? As already the roads are over burdened with vehicles through out the day and has caused a lot of problems to productivity of the country. What is the solution?

A: Restriction is not the word. We believe restriction is a stone age concept. But we have to have physical measures in order to make the public aware of the Government policies.

And obviously people are saying that there are too many vehicles on the roads. At the same time people do have disposable income that they can spend on these. So we are trying to create a balance between these two factors.

Q : You mentioned that Government will link the subsidies to employment stating that Sri Lanka spends a large amount of money annually on subsidies. Many previous Governments have attempted but hardly any significant elevation in the quality of the life was shown in the poverty affected communities. How confident are you of this new approach you are promising?

A: The Government annually spends Rs.412 billion rupees on subsidies.

In our attempt subsidies will be used to eradicate poverty but not to perpetuate poverty. We will implement only what will be best for the people.

Q: Do you mean to say that the Government already planned a new initiative ? When are you going to implement it ?

A: Yes the Government has already drawn plans. You will see it in the budget.

Q: Are you going to raise the payee ceiling in this budget? Would it not bring much relief to the large number of private sector employees.

A: Public will be able to see the Government concern to them clearly in the budget.

Q: You mentioned that 60% of the affluent class of the society are not paying taxes and that they will be included in the efforts of the Government in restructuring the taxation system. Please comment.

A: All that are considered in making the budget but will be revealed only on November 20. At the same time the 2016 tax revenue target of the Government is Rs. 2000 billion. Of course the Government is heading for an innovative approach.

Q: How long is the Government going to keep open the blanket amnesty for the cash repatriated from Swiss accounts?

A: It will be kept open and at the moment we are continuing. There is no decision as of yet to end it.

Q: The interim Budget gave a lot of relief to the people , specially on commodities. Will these be withdrawn? And in that the Government increased Rs.10,000 for the public employees. But it is still an allowance. Will this be included in to their basic salary?

A: You will see it on November 20. I’m convinced that people will say that this is a budget that they expected taking the country forward.