Saturday 2nd of March 2024

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The country went bankrupt because of the Central Bank

2023-02-06 8232


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Former Finance Minister and United National Party's Colombo district leader, Ravi Karunanayake, has alleged that the country went bankrupt not because of the governments but because of the actions of the Central Bank of Sri Lanka and its officials.

Former Finance Minister Ravi Karunanayake made this accusation at a news conference held on Sunday (05) at his residence in Sri Jayawardenapura Kotte, Rajamal Watta.

The country has collapsed. The world has collapsed. The opposition is deceiving the people by telling fairy tales on the political stage. The opposition doesn’t have a program, target or vision. There is no benefit from the opposition to the people or country.

The International Monetary Fund is not a solution for every problem. It is very difficult to build a country with these people. Only Korea succeeded with these people. The story of the International Monetary Fund is good. But we should act according to those conditions while protecting local values. We don't have to accept everything foreigners asy.

After seventy-four years, the country has collapsed because everything is given for free and everything is expected for free, from birth to death. When the country's income is two trillion rupees, 1.8 trillion rupees are spent on government employee salaries and pensions. Accordingly, only 250 to 300 billion rupees remain in hand. How to move the country forward with such a small amount..?

Increasing interest rates in the country is very unfair. The Central Bank of Sri Lanka works according to the theory that even though the sick is dead, the stomach is clean. Is it right to cut the patient's neck when it is possible to save the patient by cutting a finger? Six months ago, the bank interest rate, which was between 12% and 17%, has exceeded 30% today. But people's wages have not increased compared to that. How can people bear this situation..? Central Bank officials have no understanding of this reality.

How do innocent families live? It needs an answer. New mechanisms , strategies and tactics can be devised without raising interest rates, allegedly to control inflation. If the Central Bank continues to follow this system, all businesses in the country will have to be closed.

A new journey is needed. These problems can be solved. The problem is the lack of desire to do so. Government officials lack creativity. They don't think new. There are 17 to 18 lakhs of  government employees. 84% of the state income is spent on their salaries and pensions. After making those payments, how can we move the country with the amount between 350 and 400 billion left in hand..? There is one trillion rupees of foreign debt to be paid and about 500 billion rupees of interest has to be paid for it. If we borrow more to pay the debt, we cannot move the country forward.

The economy should be digitized. But government officials and officials do not allow it. The country should be moved forward through such reforms. Then justice will be done for all and only the needy will get relief. Resources will be shared equally among all.

The cost of the country has increased to 4.5 trillion. 35% of that amount has increased because of the interest rate. When every rupee increases, the government's budget increases by 40 billion rupees per year. When the interest rate increases by one percent, the state expenditure decreases by 70 to 80 billion rupees per year. When this interest is reduced by one percent, the cost of the country is reduced by 70 billion rupees. If the interest is reduced to 5%, the cost of the country will be reduced by 350 billion rupees.

There are people who think in a modern way. They should be used. It should not be allowed for anyone to move to this country as their private property.  I am really speaking with a heavy heart. While we were working, some people assassinated our character and created various problems. All those accusations have been proven to be false before the country.

The main reason for this economic crisis is the devaluation of the rupee and the simultaneous heavy increase of the interest rate. Therefore, it is necessary to think anew. When a normal business allocates 30% of its income for interest, about 40% for salaries, and other expenses including electricity and water, how can those businesses continue…?

It is aimed to generate about 100 billion rupees in 2023 through the paye tax. Why was that tax imposed knowing that it cannot be earned? What's the point of imposing a tax that people can't pay..? If a foreigner wants our country to increase taxes, why do we not have the courage to reject it.

The state revenue is estimated at 3.4 trillion in 2023. 100 billion rupees are estimated from the Paye tax. But only about 50 billion rupees can be earned. How much pressure is undergone by an average employee due to this? Although the income of working people has not increased, the expenditure has increased rapidly. Accordingly, I request the government to reconsider this paye tax. This tax is not practical.

There are 14 million EPF tax files. If you put 250 rupees per month in each of these tax files, you can find 42 billion per year. There are 3 million active tax files. If you get 750 rupees every month from that file , you will get 27 billion in a year. And there are another 100,000. If a tax of 75,000 rupees is imposed on it, it will get 90 billion. When all these are added up to, 157 billion can be generated. If such a simple system is implemented, it would be good for the country and the people.

If a common man's income is reduced by 20% per month due to the paye  tax, his capacity to pay as well as his lifestyle will also change. The Central Bank should act to look at these things creatively and work in new ways.

Ways of increasing income are needed. Ways to cut costs are essential. Does our country need 17 lakh government employees..? If 230 lakh people are on the 17 lakhs people who are in public service, then there is a problem if 84% of the government income is spent on public service..? There are 80 lakhs in the private sector. They do not get a benefit of even five cents. Does the development of the country benefit from government service..?

These questions are not answered by the government or the opposition. That is why I explained these facts. We have to change the way we think. There are only 5 lakhs tax files in the country. Only 35% of that number is able to pay taxes. After the 2019 tax reduction, 50% of those files were closed. So  is it reasonable for the Central Bank to remain silent for two years when the taxes were  being reduced due to which the country toppled and suddenly put the burden on the people by saying that the country will rise in six months..?

There were 15 lakhs of Sri Lankans working in foreign countries. 700 billion were earned by them. Currently there are more than 20 lakhs. But last month they generated only 470 million dollars. I think it should be a lot more than that. A system should be developed for the Sri Lankans working abroad so that they can send the dollars they earn to their bank accounts in dollars.

How difficult is it to do business in this country today? It takes three to four months to get approval from the government. But all those approvals can be obtained in a day. How much waste is happening? There are 2.1 million legal issues per year.

All we have to do is find dollars by doing some simple exports.  Foreigners can be given opportunities to get education at our private and public universities through which we can earn 5 billion a year. And our hospitals should also be opened for foreigners. But when private universities are opened, the extremists are protesting. These people do not allow any modernization.

We can modernize the banking system, build the tourism industry in a new way, develop the fishing industry, modernize the agricultural industry and export agricultural products. Our country can be called a country with the highest number of holidays in the world.

The country went bankrupt not because of the government. Because of the Central Bank, which has financial control. I am pointing out the mistakes of the government as well as the Central Bank. Without that, the country cannot be rebuilt. The central bank does not act with any practical knowledge. What the Central Bank is doing today is not its duty. They are trying to rule the country. Then what is the government that was elected by the people going to do. .? The problem is bureaucracy in the public sector.