SRI LANKA NEWS IN BRIEF – JULY 2017

 SRI LANKA NEWS IN BRIEF – JULY 2017

Compiled by Victor Melder

Sri Lanka’s tax revenues rose 25.6 percent to 554.2 billion rupees in the first four months of 2017 from a year earlier, helped by value added taxes, though excise revenues fell amid sharp hikes in tobacco and alcohol levies, official data shows. Taxes were short of ambitious targets set for the first four months of 576.5 billion rupees, but actual revenues were very sharply up from a year earlier on key categories, amid reforms in administration and value added tax. Net value added taxes after refunds rose 91 percent to 152.3 billion rupees. The current administration ended many exemptions to value added tax including alcohol and tobacco and hiked the rate to a single 15 percent rate which makes administration easy. Value added tax on domestic products jumped 88.6 percent to 96.811 billion rupees, revenues from nation building tax, a non-recoverable turnover tax rose 55 percent to 16.6 billion rupees. Import taxes rose 22.5 percent to 277.9 billion rupees with customs falling 2.2 percent to 47,392 billion rupees but value added taxes on imports rising 95.1 percent to 55.75 billion rupees. Pay-as-you-earn PAYE tax rose 24.9 percent to 12.2 billion rupees, indicating that salaries of wage earners have risen or more people were in formal employment or both. Excise duties rose 4.9 percent to 155 billion rupees helped by taxes on petrol and higher imports of diesel. Excise taxes from cigarettes and tobacco fell 17.1 percent to 23.8 billion rupees as volumes fell from sharp tax and price hike. Excise taxes from alcohol also fell 9.3 percent to 38.2 billion rupees following drop in legal alcohol demand after a tax hike. However the excise tax numbers do not reflect the total revenue collection from tobacco and alcohol on which VAT was re-imposed. In tobacco separate data showed that total revenues including VAT rose from a year earlier in the March 2017 quarter, despite a fall in total sales. (Daily Island 7.7.2017)

Sri Lanka’s state-run SriLankan Airlines has lost 9.52 billion rupees in the first four months of 2017, up 55 percent from 6.12 billion rupees a year earlier, on top of 28.14 billion rupees lost in 2016, official data showed. SriLankan is losing despite low fuel prices, when many international airlines are making profits. But a part of last year’s losses were due to compensation payments to AerCap, a leasing firm to prematurely terminate operating leases on new A350 aircraft ordered during the last regime. The airline started making losses after ex-President Mahinda Rajapaksa terminated a management deal with Emirates. But the new administration has failed to find a private partner for SriLankan after more than two years in office. According to Treasury data SriLankan had lost 50 billion rupees during the tenure of the new administration. The accumulated loses of SriLankan was 170 billion rupees as at April 2017 and it had a Rs. 116 billion hole in its balance sheet. The Treasury had provided guarantees of 29.9 billion rupees and 210 million dollars for the airline to borrow and fund losses. The global airline industry has become highly competitive and innovative with private airlines coming up and state entities have been unable to keep up. India has also announced that it will privatize its state carrier. (Daily Island 9.7.2017)

Sri Lanka will receive USD 1,340 million worth of financial and technical assistance from the World Bank Groups for the 3-year period starting from July1, 2017 under the IDA (International Development Association) Transitional Support Facility. Previously Sri Lanka received USD 660 Million IDA support for the period from year 2014 to 2017. Sri Lanka is expected to access approximately US$ 300 Mn per annum for the coming 3 years from IBRD (international bank for Reconstruction and Development) IDA and IBRD are member institutions of World Bank Group. This assistance comes as financial assistance for development projects and technical assistance for analytical and advisory services. The WB Country Director Ms Riddihough appreciating the Sri Lanka’s economic performance said that despite significant challenges, it remained broadly satisfactory in 2016 and early 2017. The WB recognizes the corrective policy measures taken in 2016 following expansionary fiscal and monetary policies implemented in the previous year as early signs of stabilization A combination of increase in revenues and rationalization of expenditures helped reducing the fiscal deficit from a reported 7.6 percent in 2015 to a 5.4 percent of GDP in 2016. While the boost received from increased profits and dividend income from State Owned Enterprises (SOEs) played a key role in increasing revenues; the changes to the VAT Act implemented late 2016 and improved revenue administration helped strengthen the tax collection. The World Bank predicts that fiscal deficit in Sri Lanka is projected to fall to 5.2 percent of GDP for 2017. This is thanks to the impact of VAT changes in its first full year. In outer years, the new Inland Revenue Act is expected to expand the tax base for corporate and personal income tax while shifting from tax holidays to a performance-based incentive regime, where the incentives depend on actual rather than promised investment. On the expenditure side, WB projects the increased fiscal space will benefit primarily public investment, assuming no major additional recurrent expenditure commitments. Under this baseline, the fiscal deficit to narrow the deficit to 3.5 of GDP by 2020. The primary fiscal balance is projected to become marginally positive in 2017. (Daily Island 13.7.2017).

The rehabilitation of the Polonnaruwa-Batticaloa railway track will be completed within two years, Minister of Transport and Civil Aviation Nimal Siripala de Silva says. At present trains run at a speed of 60 km per hour on this track, but after the completion of reconstruction activities trains would be able to travel at 100 km per hour, the Minister said during an inspection tour at Polonnaruwa Railway Station recently. It would help cut down travel time between Polonnaruwa and Batticaloa, he said. The Railway Department should acquire land for the project, officials said. The informed minister that a survey was currently underway and taxes were being charged from squatters occupying railway land in Polonnaruwa, Welikanda and Manampitiya. Transporting fuel, cement and flour was more profitable on this track said the Minister and instructed the officials to develop the infrastructure facilities. He said that a new railway track would be constructed from Kurunegala to Habarana via Dambulla. It would help ease traffic congestion caused by bowsers and lorries transporting flour and fuel from Trincomalee. The proposed Kurunegala-Dambulla track would also be beneficial to agricultural activities in Polonnaruwa and Dambulla areas, the minister said. Minister Siripala said a proper feasibility study would be conducted before the construction of the Kurunegala- Dambulla track and it would be built with minimum damage to the environment. Those activities would be planned after consultation with people and environment organisations, he said. Facilities at the railway stations throughout the country would also be upgraded, Minister de Silva said. (Daily Island 15.7.2017)

Sri Lanka’s navy has rescued an elephant that got into difficulties after being washed out to sea, a spokesman said Wednesday, calling it a “miraculous escape”. Chaminda Walakuluge said the navy mounted the 12-hour rescue after spotting the elephant struggling to stay afloat around eight kilometres (five miles) off the island’s northeast coast. Divers aided by wildlife officials approached the distressed animal and tied ropes to it before towing it gently to shallow waters near the coast, where it was released late on Tuesday. Walakuluge said the animal had likely got swept into the sea while crossing the Kokkilai lagoon, a large stretch of water that lies between two areas of jungle. “They usually wade through shallow waters or even swim across to take a short cut,” he said. “It is a miraculous escape for the elephant.” The rescue came six weeks after the navy and local residents saved a pod of 20 pilot whales who became stranded in nearby Trincomalee, a natural harbour that is popular for whale watching. The waters around Trincomalee, which was used by Allied forces as a staging post during World War II, have a high concentration of blue and sperm whales, while the surrounding jungles have herds of wild elephants. (Daily Island 16.7.2017).

Australia will join Sri Lanka in its war on dengue fever, Foreign Minister Julie Bishop said Wednesday, as the virus has claimed a record 250 lives and infected nearly 100,000 people in the South Asian country this year. Sri Lanka has deployed hundreds of troops to destroy mosquito breeding grounds as it battles to control the spread of the mosquito-borne virus, which has been unprecedented and caught authorities off guard. Humid monsoon weather, stagnant water from recent flooding, as well as mounting piles of rotting garbage accumulating in the capital, have combined to create abundant areas for mosquitoes to multiply. Official figures show about 250 deaths so far this year compared to 78 for the whole of last year, when only about 55,000 infections were reported. Bishop said Canberra would provide AUS$500,000 (US$400,000) to fund the World Health Organization’s dengue prevention and control measures in Sri Lanka. It would also fund a AUS$1 million research partnership between Australia’s Monash University and Sri Lanka’s health ministry. She said Sri Lanka could benefit from Monash University’s groundbreaking research to trial the introduction of naturally occurring Wolbachia bacteria to Sri Lanka’s mosquito populations. “It prevents the dengue virus from being transmitted between people,” she said. “It also has the ability to block other mosquito-borne diseases such as zika and chikumgunya.” Bishop made the announcement after talks with her Sri Lankan counterpart Ravi Karunanayake. Authorities have blamed a garbage disposal crisis in Colombo for the unusually large infections. The country’s main rubbish tip collapsed in April, crushing dozens of homes and killing 32 people. Stagnant water left behind after last month’s flooding was also seen as contributing to the spread of dengue.(AFP) (Daily Island 22.7.2017)

Sri Lanka arrested an Indian tourist for wearing a T-shirt with a Buddha image, an act police spokesman Ruwan Gunasekera said was an offence under the penal code. The Indian woman was arrested by three policemen on Monday and marched off to the Kollupititya police station where she was asked to sign a statement and apologise to the authorities. Police had told her that they could have deported her, but since she was leaving the country on the same night, they were letting her off with a warning. Superintendent Gunasekera told the Hindu newspaper that the Indian woman had breached Sri Lanka’s penal code, but senior officers shrugged it off and said the police spokesman being a lawyer too should have known better. Senior lawyer J.C. Weliamuna told the respected Indian national newspaper that wearing Buddha T-shirts was not a violation of any law in the country. “Only defaming a religion is a criminal offence in Sri Lanka, wearing a normal print of the Buddha does not amount to that,” Weliamuna said describing the police action and Gunasekera’s remarks as “ridiculous.” A British nurse is currently suing Sri Lankan authorities and seeking 10 million rupees in compensation for her wrongful arrest in March 2014 for having a tattoo of a Buddha on her upper arm. Sri Lanka’s Tourism Promotion Bureau apologised to her and paid for her return ticket and has expressed regret for the entire incident. Nurse Naomi Coleman has insisted that she is a devout Buddhist and that the tattoo is a mark of respect. Sri Lanka barred another British tourist from entering the island in March 2013 for showing “disrespect” to Buddhism by having a Buddha tattooed on his arm. (Sunday Observer 23.7.2017)

As the number of dengue cases tops 100,000 in Sri Lanka, the Sri Lanka Red Cross Society and the International Federation of Red Cross and Red Crescent Societies (IFRC) are rapidly scaling up emergency assistance to help contain the country’s worst-ever outbreak of the mosquito-borne viral disease. Dengue patients are streaming into overcrowded hospitals that are stretched beyond capacity and struggling to cope, particularly in the country’s hardest hit Western Province. Sri Lanka’s Ministry of Health reports that the number of dengue infections has climbed above 103,00 since the start of 2017, with 296 deaths. The number of cases this year is already nearly double the number of dengue infections recorded in all of 2016, when 55,150 people were diagnosed with the disease. “Dengue is endemic here, but one reason for the dramatic rise in cases is that the virus currently spreading has evolved and people lack the immunity to fight off the new strain,” says Dr Novil Wijesekara, Head of Health at the Sri Lanka Red Cross. Compounding the crisis, recent monsoon rains and floods have left pools of stagnant water and rotting rain-soaked trash—ideal breeding sites for mosquitoes. Ongoing downpours and worsening sanitation conditions raise concerns the disease will continue to spread. In coordination with government partners, Red Cross teams are set to expand patient care at six priority hospitals and improve or install water and sanitation at nine medical facilities. Additional teams of volunteers will be trained to identify and eliminate vector breeding sites, and then deploy to 72 vulnerable communities to lead household, school and community information and clean-up campaigns. “The size of this dengue outbreak is unprecedented in Sri Lanka,” says Jagath Abeysinghe, President of Sri Lanka Red Cross. “It will require a united front in support of the government’s prevention and control programme and committed community action to tackle it.” “Dengue tends to seek out the poor who live in densely populated places where sanitation is inadequate, rubbish piles up, water pools and mosquitoes thrive,” says Gerhard Tauscher, IFRC’s operations manager in Sri Lanka. “But the disease can be stopped in its tracks when affected communities are informed about prevention and treatment, have access to medical care and mobilize to clean up their environment. That’s what our teams are focusing on.” (Daily News 24.7.2017)

Colombo Magistrate Lal Ranasinghe Bandara, yesterday, ordered the release of 15 elephants to be paraded in the Kandy Sri Dalada Perahera. The release order is valid from July 27 to August 15. These elephants had been ordered to be taken into the custody of the Wildlife Department, from the owners who had not possessed valid licences to keep them. The elephants were handed over temporarily to the former owners, on a bond of ten million rupees per animal. The care for the elephants is to be taken over by the persons who are taking them over temporarily. The Director General of Wildlife will have access to these elephants, at any time. Counsel Ajith Pathirana on July 25, 2017 handed over letters from the Diyawadana Nilame and the Bassnayake Nilames of the four Devalas, asking the elephants to be deployed in the Perahera. The court ordered the release of the animals after considering these letters. However, the Magistrate refused the release of five elephants, belonging to a person called ‘Ali Roshan’ and one elephant, in the custody of the former Additional Magistrate of Colombo, Thilina Gamage. Meanwhile, President Maithripala Sirisena has consented to gift a tame tusker he is receiving from the government of Myanmar to Sri Dalada Maligawa. President Sirisena has expressed his willingness to make the gift when Diyawadana Nilame Pradeep Nilanga Dela recently informed the president of the hardships faced by temple authorities to hold the annual religious procession owing to scarcity of tame elephants and tuskers. The Myanmar tusker is likely to be gifted to the Sri Dalada Maligawa early August during the Kandy Esala Perahera. (Daily Island 27.7.2017)

Sri Lanka on Saturday sealed a billion-dollar deal to let a Chinese state firm take over a loss-making port in a move that worries many, including its giant neighbour India. The long-delayed $1.1 billion sale of a 70 percent stake in Hambantota port, which straddles the world’s busiest east-west shipping route, was confirmed by Sri Lanka’s Ports Minister Mahinda Samarasinghe. The government used tough laws against industrial action to stop workers going on strike this week to oppose the sale to China Merchants Port Holdings. India is nervous about China’s infrastructure moves into its traditional sphere of influence. “We have addressed geo-political concerns,” the minister said at a signing ceremony in Colombo. “China has accepted that everything in this agreement will operate under Sri Lankan law.” Negotiations over the deal were held up for months amid opposition from trade unions and political parties. The minister said this week that several countries had raised fears about the sale. India and the United States are known to be concerned that China getting a foothold at the deep-sea port could give it a military naval advantage in the Indian Ocean. Samarasinghe said that Hambantota, 240 kilometres (150 miles) south of Colombo, will not be a military base for any country. Executive vice president Hu Jianhua said the company wanted to make Hambantota the gateway to expanding economies in South Asia and Africa where it has similar port operations. Sri Lanka has signed up to President Xi Jinping’s signature foreign policy initiative, which aims to strengthen China’s land and sea trade routes. India has snubbed Xi’s plan and skipped a May summit in Beijing that was attended by world leaders. Samarasinghe said Hambantota will be purely a commercial port, but any routine port calls by foreign navies will be regulated by Sri Lanka as in the case with the Colombo port. Apart from the $1.12 billion sale price, the Chinese firm will invest another $600 million to develop Hambantota, Samarasinghe said. The port has racked up losses of $300 million in the last six years, according to official figures. In addition, the government pays more than $60 million annually to service the port’s debt. (Sunday Island 30.7.2017)

The Ceylon Electricity Board (CEB) yesterday warned of a further restriction in the supply of electricity due to the reduction of hydro-power electricity generation as the water levels in the reservoirs had dropped drastically to 36 per cent of capacity. CEB media spokesman Sulakshana Jayawardana said the daily electricity demand in the country had increased by over 2,400 megawatts (MW) with 44 Gigawatt-hours (GWh) used in the day-time alone. Mr. Jayawardana said the county’s total capacity is 4,000 MW and from that 1,350MW was generated using large scare hydro-power plants while another 350 MW was generated by small-scale hydro-power plants. He said the prevailing dry weather has severely affected hydro-power generation with the need to supply water for drinking and harvesting necessitating further cuts in the supply of electricity to consumers. He requested the public to use electricity sparingly, especially during the peak period from 6.30 pm to 10.30 pm. Meanwhile he said they had been trying to re-instate a private power plant at Kelanitissa which had not been operational for some time, however a technical fault was not allowing this to take place. He said the AES Kelanitissa power plant has a capacity of 163 MW. (Daily Mirror 30.7.2017)

The total number of people affected by the prevailing drought had increased over one million, the Disaster Management Centre (DMC) census said today. The DMC said that eight provinces out of the nine, where people in 17 districts were hit by the drought. According to the DMC latest situation report 1, 093, 717 people belonging to 314, 049 families had been severely affected by the prevailing drought. The Northern Province is the most affected Province with a total of 462, 815 individuals belonging to 133, 678 families being hit by the drought. The North-Western Province and the Eastern Province followed with a total 281, 013 people belonging to 82, 513 families and 211, 736 people belonging to 59, 003 families respectively. In the Kurunegala District 149, 962 individuals belonging to 45, 730 families were affected by the drought. Meanwhile, 79, 602 people belonging to 23, 285 families in the North-Central, 20, 641 people belonging to 5, 904 families in the Central Province, 29, 868 people belonging to 7, 668 families in the Uva Province, 812 people belonging to 183 families in the Sabaragamuwa Province and 7, 230 people belonging 1, 875 families in the Southern Province reportedly affected by the drought. The DMC report said that out of 17 affected districts, drinking water was provided to selected areas in ten districts. Meanwhile, the Meteorology Department said that showers or thunder showers could be expected in the in Central, Sabaragamuwa and Southern Provinces and several spells of shower will occur in North-Western Province today. (Daily Mirror 31.7.2017)

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