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Local banking system won’t be further taxed, 7 Mn. bank deposits will be protected – Governor CBSL

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The CBSL and Treasury officials at the event
The CBSL and Treasury officials at the event

The Sri Lankan local banks have been very cooperative and responsible towards economic recovery, paying their dues well in time, said Central Bank Governor Dr. Nandalal Weerasinghe attending the special press conference yesterday at the Presidential Media Center on domestic credit optimization.

Senior Advisor to the President on Economic Affairs Dr. R.H.S. Samaratunga, Finance Ministry Secretary Mahinda Siriwardena and Deputy Treasury Secretary A. K. Seneviratne was also present.

He emphasized that the banks already contributed over 50% in taxes and hence they will no longer be burdened in the optimization of domestic debt.

“For example, the current amount of tax paid by banks is more than 50%. It can be shown as company tax 30%, VAT and financial services 18%, social security contribution 2.5%.”

The local banks also have Rs. 57 million public and private deposits and this move will ensure that there are panic withdrawals from the banking system and it will be protected.(wont make sense)

The Governor of the Central Bank stated that if there is a collapse in the country’s banking sector, it will bring catastrophic consequences, so it is essential to protect the banking sector.

Asked why Friday (30) was declared a bank holiday he said that it was to prevent transmission until the approval of the Parliament for the restructuring of local debt. (DDR) “There was heavy speculation that the local banking system will be heavily taxed or money would be withdrawn from fixed deports and similar uncalled for presumptions and the holiday will help to cool off these speculations.”

In order to bring the government’s total domestic debt to a sustainable level, we have to bring the current criteria to some sort of stable level within a period of 10 years, as agreed with the International Monetary Fund.

“For example, by the end of 2022, public debt as a percentage of gross domestic product was 128%. But it should be brought down to less than 95% by 2032. That is the first criterion.”

“The second criterion is to bring the government’s total financing requirement as a percentage of the government’s GDP annually from the current level of 34.6% to an average level of 13% or lower during the 05-year period 2027-2032.

“The third criterion is foreign debt servicing. It currently stands at 9.4% of GDP. It should be brought to the level of 4.5% during 2027-2032.”

Both the Governor and Secretary of the Ministry of Finance Mahinda Siriwardena, assured that the existing employee provident funds will not be touched, and will guarantee an interest of at least 9% for the employee provident fund.

Friday, June 30, 2023 – 01:00

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