The Hon. Anura Kumara Dissanayaka - President, Minister of Defence, Minister of Finance, Planning and Economic Development and Minister of Digital Economy

¶ 01 Mr. Speaker, yesterday a three-hour debate was held on the Government’s position regarding debt restructuring. The responsible Ministers and the State Minister of Finance presented the pathway and achievements; I will not repeat those details.

¶ 02 However, a public narrative is being promoted that when debt payments resume in 2028 the country will again go bankrupt. Remember: in 2028 this Government will still be in office, and we will not allow a repeat of 2022-2023. Our target is to raise foreign reserves to USD 15.1 billion by 2028, and we are working towards that with strong confidence.

¶ 03 Of the USD 12,550 million under restructuring, USD 11,550 million was borrowed during 2015-2019. If the advice being given now had been given then, our country would not have gone bankrupt. Advice delayed is advice denied.

¶ 04 On the IMF: the second review concluded and the second tranche was released before we assumed office. The third review was due in September but was delayed owing to elections; the IMF publicly stated they would not proceed during that period. We restarted discussions on 16 November.

¶ 05 During the second review, prior agreements included: - A property tax (based on imputed rent) from 2025; - A 30% corporate income tax on services exports; - Replacing the Special Commodity Levy with VAT by January; - Removing the Simplified VAT (SVAT) by April 2025.

¶ 06 When commencing the third review, we proposed revisions. PAYE created great distress among professionals—university academics, doctors, bank managers, and others. We proposed raising the threshold from Rs. 100,000 to Rs. 150,000 per month, and widening the first 6% bracket to Rs. 500,000–1,000,000 per month. Consequently: - Rs. 150,000/month: 100% tax relief; - Rs. 200,000/month: 71% relief; - Rs. 250,000/month: 61% relief; - Rs. 300,000/month: 47% relief; - Rs. 350,000/month: 25.5% relief; with greater relief for lower incomes.

¶ 07 We also focused on child nutrition. The previous Government imposed VAT on fresh milk-based products like milk powder and yoghurt. We agreed to exempt domestically produced fresh milk and related products from VAT to improve child nutrition.

¶ 08 The second review sought a 30% tax on services exports; we agreed to reduce it to 15%, consistent with international norms.

¶ 09 We will increase the Withholding Tax from 5% to 10%. Some may worry about retirees living on interest. Typically one falls under WHT if monthly interest income exceeds about Rs. 150,000 (Rs. 1.8 million annually). The Inland Revenue Department will establish a dedicated unit so citizens whose interest income is below these thresholds, or whose personal tax is lower than 10%, can promptly obtain directives to exempt or reduce WHT. Mechanisms will be set up at IRD headquarters and all regional offices to ensure no undue burden on low-income retirees.

¶ 10 We also plan to gradually reopen the vehicle market. It is linked to industries and livelihoods; we cannot keep it closed indefinitely. In three phases: - Passenger transport buses and special-purpose vehicles may be imported from 14.12.2024; - Goods transport vehicles will also be reopened; - Private-use motor cars will reopen from 01.02.2025.

¶ 11 Do not fear a dollar crisis: with the Central Bank we estimated the dollar outflows and the economic stimulus from these imports. To revive the economy, the vehicle market must be reopened. We will proceed firmly.

¶ 12 Though not part of the third review, I note that the implementation of the Quarries (Mines and Minerals) law suspension as of 15 December 2024… (continues).