YES On Prop 30

In response to a severe financial crisis, Sri Lanka’s government has taken urgent steps. These include tax hikes and changes in how the government earns money. These actions are led by Prime Minister Ranil Wickremesinghe.

The aim is to fix the budget gap worsened by the global pandemic. This is important for the country’s economic health.

New tax measures mean higher taxes for businesses and less tax relief for individuals. These changes are expected to raise a lot of money for the country. This comes as Sri Lanka faces high inflation and economic challenges.

Groups like OMP Sri Lanka note the focus on increasing government earnings. The goal is to boost the revenue-to-GDP ratio above 14% by 2025.

The government’s efforts to reform the economy and fix the fiscal deficit are clear. Sri Lanka has sought help from the IMF sixteen times before. Today, the focus is on economic recovery, managing debt, and sustainable governance.

Understanding the Fiscal Deficit and Measures in Sri Lanka

To understand Sri Lanka’s financial issues, we must look at its fiscal deficit over time. The budget gap grew because of tax cuts and COVID-19, which hurt tourism and remittances.

The Roots of the Crisis and Previous Tax Cuts

Big tax cuts in late 2019 were meant to boost the economy. But, they cut government income by a lot, around 800 billion Sri Lankan rupees. With the COVID-19 hit, the fiscal deficit shot up to 12.2% of the GDP in 2021 from 9.6% before.

Prime Minister’s Fiscal Consolidation Plan

The Prime Minister has a plan to fix this by cutting government spending and changing fiscal policies. This is key to getting an IMF loan and fixing debt issues. His goal is to get back to the income levels before the pandemic and stabilize government finances.

The Role of Inflation in the Fiscal Equation

It’s important to understand how inflation fits with fiscal policy. Sri Lanka is working to control inflation and keep the economy stable. This effort comes as it faces fiscal and balance of payments challenges.

The government also aims to get better at collecting taxes. By doing this, it hopes to reduce the gap in the budget.

Indicator	Jan-Sep 2022	Jan-Sep 2023
Budget Deficit	Rs. 1,244 billion	Rs. 1,614 billion
Tax Revenue	Rs. 1,283 billion	Rs. 1,934 billion
Total Expenditure	Rs. 2,695 billion	Rs. 3,732 billion
Total Revenue	Rs. 1,448 billion	Rs. 2,110 billion
Government Debt	Rs. 24,264 billion	Rs. 26,916 billion

Read more about Sri Lanka’s economic projections and reform effects here.

Government Implements Tax Hikes to Boost Revenue Amid Fiscal Deficit

The Government of Sri Lanka is tackling financial issues caused by a big fiscal deficit. They have introduced key tax reforms to strengthen the economy. One major change is altering the tax regime to increase government revenue and achieve fiscal consolidation.

Strategic Increase in Value Added Tax

To help with financial restructuring, the VAT on financial services rose from 15% to 18% in January 2022. It then went from 8% to 12% in May 2022, showing the government’s focus on making more money. They plan to increase the VAT to 15% by September 2022.

Corporate Tax Rates Climb as Part of Revenue Enhancement

Corporate income tax rates jumped from 24% to 30%. This increase helps cover growing state expenses and supports economic stability. It’s a big part of improving government revenue.

Personal Tax Reliefs Slashed to Buffer Financial Deficits

To deal with the financial deficit, personal tax reliefs were greatly reduced. The tax-free income limit went down from Rs. 3.0 million to Rs. 1.2 million per year. Tax rates now range from 6% to 36%, up from 4% to 24% before.

Additional Tax Measures and Their Expected Outcomes

A one-off 25% surcharge tax is now on high-earners and big businesses. There’s also a new 2.5% Social Security Contribution Levy on turnover for large businesses. These fiscal consolidation steps aim to stabilize the economy, hoping for a 4.0% fiscal deficit by 2025.

Efforts also include forming a Large Tax Payers Unit and doing risk-based audits. These steps should make the revenue system more efficient and effective.

Measure	Details
VAT Increase	From 8% to 12%, with a proposal to reach 15%
Corporate Tax Rate	Increased to 30% from 24%
Personal Income Tax Adjustment	Threshold reduced to Rs. 1.2 million
Surcharge Tax	25% on income exceeding Rs. 2.0 billion
Social Security Levy	2.5% on turnover for major businesses

The Burden of Adjustments and the Path to Stability

Sri Lanka is working through tough economic challenges. The government has started using financial reform strategies for better stability and growth. The goal is to lower the fiscal deficit to 4.0 percent of GDP. They also want to cut the debt ratio to about 75.5 percent by 2025.

This effort comes after the country’s ratings went down in January 2020. The plan includes improving government income through smart tax moves. It also involves cutting back on unnecessary spending and using digital tools to upgrade government operations.

Dealing with the rising public debt is a big challenge. This issue grew because of consistent budget deficits and the impact of COVID-19. Sri Lanka has started restructuring its debt, with help from an IMF agreement in September 2022.

They expect to raise government revenue by expanding the Value Added Tax and income tax bases. Changes made in late 2022, like the surcharge tax on high-income businesses, are key. These steps could increase the revenue-to-GDP ratio to 14.2 percent by 2025.

Aiming for a primary balance surplus from 2024 shows a commitment to long-term financial health. By funding essential infrastructure with domestic resources, the government supports agriculture and industry. This strategy helps build a strong economy that can deal with global issues.

Research shows focusing on reducing unnecessary spending works better than increasing taxes. Sri Lanka is dedicated to improving its economy and building a powerful infrastructure. These efforts are meant to ensure economic resilience and prosperity for its people.

Sri Lanka is making big moves in South Asia. It’s boosting its foreign policy by getting closer to India and China. This is crucial because Sri Lanka is in a key spot for sea routes. Seeing how important these partnerships are, especially after a tough economic hit, Sri Lanka is stepping up.

The country got a huge $4 billion aid from India and China is its main lender. President Wickremesinghe is all in on building these relationships. He wants alliances that support Sri Lanka’s future and independence.

Key Takeaways

• India’s $4 billion economic support supersedes IMF’s assistance during Sri Lanka’s recent fiscal crisis.
• China’s extensive involvement in post-civil war development projects underscores its significant influence in Sri Lankan affairs.
• The Janatha Vimukthi Perumana’s stance on foreign policy exhibits a tilt towards China, creating a complex diplomatic landscape.
• Delicate balancing of Sri Lanka’s alliances with India and China remains a focal point for the administration.
• India’s proactive “India Out” tourism campaign and immediate aid reflect a strategic investment in Sri Lankan stability.
• India and China, with competing interests, remain unlikely allies in Sri Lanka’s path to recovery.
• New initiatives under the “Indo-Lankan investment partnership” highlight India’s commitment to regional solidarity.

Overview of Sri Lanka’s Diplomatic Strategy

Sri Lanka is carefully crafting its foreign policies due to increasing geopolitical rivalry. The country aims to boost its strategic autonomy. Strengthening relationships with major Asian countries, especially India and China, is key. Sri Lanka’s focus is on improving its economy and military, and smoothly handling regional politics. They commit to nonaligned foreign policies.

The nation has a clear stance on global conflict management. Its neutral position in the Ukraine conflict highlights this approach. By staying non-aligned, Sri Lanka wisely manages its international relations during global tensions. Strengthening ties with India shows a smart balance. They are working more on energy and economic areas together.

Engaging diplomatically with India and China brings clear benefits. Projects in defense, trade, and infrastructure are ongoing. These efforts show Sri Lanka’s smart strategy. It aims to gain diplomatically while keeping balanced ties globally.

Sector	Initiative	Partner Country	Details
Defense	Capacity-building for Police Officers	India	Training courses for over 130 officers in India’s premier defense institutions, focusing on counter-terrorism and internal security.
Economic	Financial Assistance	India	Financial support under the “Aid to Sri Lanka” program, reinforcing economic ties and facilitating Sri Lanka’s financial restructuring with international bodies.
Energy	Enhanced Cooperation	India	Agreement in 2023 focused on strengthening energy and economic exchanges, crucial for Sri Lanka’s sustained growth and energy security.

In navigating global diplomacy, Sri Lanka is keen on a balanced, independent policy. By connecting with both India and China, it boosts its role. Sri Lanka aims for regional stability and prosperity. Its strategy of forming varied alliances while staying autonomous makes it key in South Asia.

Sri Lanka Strengthens Diplomatic Ties with India and China

Sri Lanka is in a key spot in the Indian Ocean, making big moves diplomatically. It’s working closely with India and China, two big names in the region. These partnerships cover defense, economy, and big projects, all while keeping a balanced foreign policy.

Enhanced Defense Cooperation with India Reflects Deeper Ties

The partnership between Sri Lanka and India has reached a new level. Thanks to the ITEC program, India is helping Sri Lanka’s officers with special training and support. This is key for India to keep its influence in the Indian Ocean. The two countries also work together on protecting marine ecosystems and boost trade with renewable energy projects in focus.

Sri Lanka’s Economic Engagements and Infrastructure Projects with China

Sri Lanka and China are also working closely, with big agreements shaping their partnership. Landmark projects like Port City Colombo show China’s big role, as Sri Lanka’s top creditor. Despite financial and political challenges, these projects keep moving forward, linking to China’s broad economic plans.

Strategic Balancing in Regional Partnerships

Sri Lanka is smartly managing its relations with big economies like China, India, and the US. Even with India and China’s tensions, Sri Lanka seeks balance, keeping its interests first. This diplomatic skill helps it stay important in regional and global politics, where smart choices matter a lot.

A significant development has taken place in Sri Lanka, as announced by OMP Sri Lanka. The Dissolution of Parliament was officially declared. This event occurred just after midnight on September 24th, when the legislative body was dissolved by President Anura Kumara Dissanayake. This is a monumental decision in the country’s history. It paves the way for a crucial election on November 14.

After winning the presidency in an election with high voter turnout, President Dissanayake is moving forward with his agenda. He aims to tackle corruption and economic challenges. The announcement of the Election, after dissolving the parliament, is a key moment. It signals major policy changes and efforts to meet the International Monetary Fund (IMF) bailout terms.

Key Takeaways:

• President Anura Kumara Dissanayake used his power to disband the Parliament. This marks a vital step for Sri Lanka’s governance.
• The upcoming general election on November 14 is a pivotal time for the country’s future.
• President Dissanayake’s election victory showed huge public support, marking a significant change from the 2019 results.
• The previous administration’s economic problems and high inflation highlighted the public’s desire for change.
• Ensuring stability and prosperity are priorities, with plans for tough anti-corruption actions and expanding social welfare.
• Investors are cautious about the financial sustainability regarding the new economic policies announced.
• The position of the Janatha Vimukti Peramuna in the assembly poses a hurdle to achieving majority representation.

President Dissanayake Dissolves Parliament, Calls for November Elections

In a bold move, President Anura Kumara Dissanayake of Sri Lanka has dissolved Parliament. This action marks a significant change in the country’s political scene. Based on Article 70 of the Sri Lankan Constitution and the Parliamentary Elections Act, the President made this decision. Now, Sri Lanka is set for early Elections, sooner than originally planned.

The Exercise of Constitutional Powers by President Anura Kumara Dissanayake

President Dissanayake used his Constitutional powers wisely and legally. By invoking Article 70, he ended the current Parliament’s session. His party had only three seats out of 225. This important step is expected to lead to major changes in Sri Lanka’s government.

Setting the Stage: Article 70, the Constitution and the Parliamentary Elections Act

Sri Lanka’s laws clearly lay out how to dissolve Parliament and organize new elections. The President has this power thanks to Article 70. The Parliamentary Elections Act gives details on election procedures. These rules ensure a fair and democratic election process in Sri Lanka.

Expected Political Realignments and Candidature Announcements

After President Dissanayake’s announcement, many political leaders are getting ready for the elections on November 14. For example, Mahinda Rajapaksa is adjusting his strategy anticipating how voters will react. Harini Amarasuriya, the new Prime Minister, is focusing on issues like youth development, child protection, and gender equality. Her approach could majorly affect the upcoming elections.

President Dissanayake’s decision to dissolve Parliament is stirring up Sri Lanka’s politics. As the country moves towards these important Elections, all eyes are on how these changes will influence Sri Lanka’s future.

Impact of Parliamentary Dissolution on Political Landscape

Sri Lanka’s political scene is changing with the Parliament’s dissolution. President Anura Kumara Dissanayake made this bold move. It shows his dedication to solving longstanding governance problems.

These challenges grew due to economic crises and ongoing instability. This step into a new phase shows hope for better governance.

Timeline of Events Leading to the Dissolution of Parliament

The journey to change began with the National People’s Power alliance’s (NPP) election success. Their rise was helped by the Janatha Aragalaya protests. People were upset with the old system. This led to calling for general elections.

These elections hinted at a major shift in electoral politics. A new chapter for the nation seemed ready to start.

Reactions from Political Parties and Government Officials

The reactions to the Parliament’s dissolution were mixed. Some were worried, while others supported it. Political parties and officials have been vocal about it.

This shows a change in the direction of Sri Lanka’s politics. Everyone is getting ready for the upcoming elections with great interest.

Projections: Shifts in the Balance of Power and Governance

Experts are watching how this will change governance. President Dissanayake is seen as a unique leader. His approach might shift power balances.

This change could bring needed reforms. Especially if it addresses economic and social issues. High voter support for Dissanayake suggests people want this change.

There’s hope for a governance that tackles problems head-on. With Dissanayake’s leadership, Sri Lanka could move towards stability and sustainable growth. This is an exciting time for the country.

President Gotabaya Rajapaksa decided to resign, marking a historic moment for Sri Lanka. The public’s call for change led to widespread protests. These protests brought political unrest to the country. Rajapaksa, at 73, chose to resign on July 13, 2022. He wanted to make sure power passed on peacefully. This happened during the country’s biggest government crisis in 70 years.

Sri Lanka’s political scene was shaken by months of intense protests. The protests were fueled by rising inflation, which hit 54.6 percent in June. People also faced severe shortages of food, fuel, and medicines. This led them to demand a $3 billion bailout from the International Monetary Fund (IMF). When President Rajapaksa secretly left his residence, protesters took over it. Prime Minister Ranil Wickremesinghe also announced he would resign. This was to help start a new government with multiple parties involved.

Key Takeaways

• President Gotabaya Rajapaksa decided to resign amid a severe economic and government crisis incited by mass protests.
• Widespread public unrest manifested through significant social movements, culminating in the occupation of the presidential residence.
• Inflation has drastically affected Sri Lankan citizens, with rates soaring to 54.6 percent within the country.
• An immense crowd of protesters, reflecting the nation’s demand for change, has played an integral role in the political shifts.
• The planned resignation of President Rajapaksa and Prime Minister Wickremesinghe heralds a potential shift to a more democratic era in Sri Lanka.
• The national crisis was marked by shortages of essential resources and an appeal to the International Monetary Fund for economic relief.
• The announcement of leadership resignations ignited celebrations in Colombo, signaling a hopeful turn for Sri Lanka’s future.

Mass Protests Lead to Resignation of President Gotabaya Rajapaksa in 2022

In 2022, Sri Lanka faced tough times. Political and economic issues caused big protests and calls for change. People wanted leaders to answer for their actions. This led to a huge increase in protests, especially in Colombo, the capital.

The Escalation of Public Unrest in Sri Lanka

The protests in Colombo grew larger than ever before. People were really upset with the government. Bad economic decisions were to blame. By February 2022, Sri Lanka had only $2.31 billion left. This was not enough to pay off its debts. Crowds of protestors filled the streets. They wanted leaders to fix things right away.

President Gotabaya Rajapaksa’s Flight from Presidential Residence

On July 9, 2022, protestors took over the Presidential home. The police couldn’t stop the large crowds. This forced President Rajapaksa to leave with the help of the military. He resigned five days after. Leaders around the world recognized this. It was a key moment for Sri Lanka’s hope for better leadership.

Nation’s Response and Celebrations Post-Resignation Announcement

When President Rajapaksa resigned, people across the country celebrated. It was a big moment of joy and hope for everyone. They believed this would lead to a government that listens to its people. The protests put Sri Lanka in the global news. It showed the world their struggles and desire for change.

Prelude to the Political Upheaval: Sri Lanka’s Economic Crisis

Before 2022, Sri Lanka was facing a tough time. The country was dealing with a huge foreign debt crisis. This situation made life hard for its people due to a lack of fuel and food. These problems led to big political changes and calls for the government to do better.

Sri Lanka owed $51 billion to other countries. They needed to pay back $28 billion by 2027. By April, the country could not pay its loans, which was a first. This caused even bigger problems, making it hard to get important goods into the country. There was a big shortage of things people needed every day.

The country’s financial troubles made it hard to talk with the IMF about getting help. Because of this, living costs soared, making life difficult for many people. Prices went up by 54.6%, and people were worried the country would go bankrupt. This fear and frustration led to big protests at places like Galle Face Green.

Economic Indicator	Status in Early 2022	Status at Mid-Year
Foreign Debt	$51 billion	$51 billion (Default)
Fuel Availability	Limited	Critical Shortages
Food Availability	Sparse	Severe Scarcity
Inflation Rate	Elevated	54.6%

Due to these tough conditions, people all over the country protested, especially at Galle Face Green. They were not just upset about the economy. They also wanted big changes in how the country was run. The severe economic problems showed the big issues Sri Lanka faced. The people’s strong desire for change was clear and powerful.

Sri Lanka’s Struggle for Democracy and Civil Revolt

The fight for democracy in Sri Lanka has deep roots linked to the Rajapaksa family’s dominance. For about twenty years, they controlled key government roles. This control led to a widespread demand for political change and reforms from the people.

Political Dynasty: The Rajapaksa Family’s Two-Decade Reign

The Rajapaksa family had a big role in Sri Lanka’s government. They were involved in various positions, from president to finance minister. Their era was filled with issues like nationalism, corruption, and poor economic choices. These problems led to economic crises, making people want a complete change in government.

Transformation of Peaceful Protests to a National Movement

What started as peaceful protests turned into a significant national movement. Thousands marched in Sri Lanka, with major protests at places like Galle Face Green. People took over public areas, showing their frustration. This included families demanding justice for lost ones from the civil war, ongoing for over 1,900 days.

International Response to the Government Crisis

The world has taken notice of Sri Lanka’s political problems, understanding its impact on regional peace. The United States, in particular, has been outspoken. They support the peaceful protestors and are ready to help stabilize Sri Lanka politically and economically. This global concern highlights the need for quick and effective solutions.

Issue	Impact	Response
Ban on Chemical Fertilizers	Devastated agriculture, leading to a 20% drop in rice production and an 18% decrease in tea exports	Policy reversed after significant economic backlash
Economic Mismanagement	Severe economic crisis leading to the first financial default in Sri Lanka’s history	IMF debt restructuring program put on hold; calls for increased transparency and economic reforms
Corruption and Nepotism	Heightened public distrust and indignation, fuelling mass protests	Popular demands for the Rajapaksa family’s exit from politics and enhanced political accountability

Sri Lanka’s journey towards democracy is marked by strong internal efforts and global support. This movement continues to attract worldwide attention as it seeks to solve long-standing political challenges.

Aftermath and the Search for Political Stability in Sri Lanka

After mass protests, Sri Lanka faces a big challenge. Gotabaya Rajapaksa’s recent resignation has created a need for stable leadership. The country is in its worst economic crisis since becoming independent. The protests show that people want a reliable and open government.

Sri Lanka is at a critical point. It needs a strong plan for recovery. This includes getting help from the International Monetary Fund, fixing foreign debt, and getting international aid. The government must listen to its people and make governance transparent. This is key to Sri Lanka’s success. Problems like the struggling education system need fast solutions. These issues are pressing, especially after mistakes like the sudden fertilizer ban that hurt food supply.

OMP Sri Lanka believes that with smart financial policies and help from other countries, it’s possible to improve the economy. By working on issues like hyperinflation and large debts, Sri Lanka can overcome its crisis. Recent events highlight the need for wise and strong policies. The people, who have protested for change, now wait for a government that can lead them to a better and more secure future.

The US embassy in Colombo has urgently warned travelers about Arugam Bay. They’ve flagged safety concerns due to a potential terrorist attack threat. This warning comes from reliable intelligence. It suggests evacuating without delay. Following this, the Israel’s National Security Council has given similar advice. They urge Israelis to leave Arugam Bay and nearby areas to ensure tourist safety during this emergency situation.

While highlighting the importance of Sri Lanka’s tourism, the alert also stresses the severe threat level. This year, up to September, about 20,000 Israelis chose Arugam Bay as their travel destination. These travel warnings could seriously affect the local economy. With growing safety worries, Sri Lanka has boosted its security. A large number of police and Special Task Force officers are now working to keep the area safe.

Key Takeaways

• Credible information indicates potential terrorist attacks in Arugam Bay, prompting US and Israeli travel advisories.
• The US Embassy has placed immediate travel restrictions for embassy personnel to Arugam Bay.
• Israeli and US citizens in affected areas are urged to evacuate or relocate to safer locales with increased security.
• Sri Lankan authorities enact preventive measures by deploying additional security to maintain the tourist haven’s safety.
• These developments highlight the delicate balance between promoting Sri Lanka as a top travel destination while ensuring tourist safety.
• The current threat level emphasizes the need for constant vigilance for international travelers within Sri Lanka.

Sri Lanka’s Arugam Bay: Why are US and Israel asking tourists to leave?

Recently, the US and Israel warned their citizens about visiting Arugam Bay in Sri Lanka. They did this due to threats of terrorism in popular tourist spots. Local officials are now taking extra security steps to protect everyone.

These travel advisories mean Sri Lanka’s safety is a big talk. After the threat level went up, Sri Lanka’s police and special forces increased their security. They are paying extra attention to places where tourists from Israel hang out.

Assessing the Credible Threat in Arugam Bay

The threat has not been spelled out, but it’s caused more safety actions. Officials are working hard to stop any danger. They’re focusing on Arugam Bay, a beautiful spot that draws tourists from all over the world.

Actions Recommended By the US Embassy for Travelers

The US Embassy asked Americans to be very alert. They suggest signing up for the Smart Traveler Enrollment Program (STEP). This program helps travelers get updates and help from the Consulate. The Embassy advises avoiding busy places and reporting strange things to the police.

Impact of Travel Warnings on Sri Lankan Tourism and Economy

Travel warnings could hit Sri Lanka’s economy hard, especially in Arugam Bay. This area relies a lot on tourists. The warning comes at a bad time, just after the popular surfing season. Israeli tourists, who make up a good portion of visitors, could greatly affect the area’s earnings.

The economic troubles plus the impact of travel advisories highlight the need for strong safety rules and economic plans. For Arugam Bay to thrive, businesses must follow rules and keep things fair. This is vital for Sri Lanka to overcome its economic problems and grow.

Safety Concerns and Emergency Preparedness in Sri Lanka

Recent alerts from the United States and Israel have raised safety worries in Sri Lanka, especially in Arugam Bay. About 1,000 Israelis visit Arugam Bay in peak seasons. This is significant since over 1.5 million tourists have visited Sri Lanka in just nine months. The Sri Lankan authorities have increased their efforts in emergency preparedness.

There has been a notable boost in security measures across Sri Lanka. More police and law enforcement are now on the ground. The aim is to strengthen safety for everyone, following the 2019 Easter attacks. These attacks hurt Sri Lanka’s tourist economy deeply, killing 270 people, including 45 foreigners.

Now, about 500 police, military, and special forces personnel keep a close watch to protect tourists and locals. Another issue is unregulated foreign-run businesses. The Sri Lanka Tourism Development Authority is working to include these businesses in the formal economy. This helps manage competition and maintains order.

Arugam Bay is calm after the tourist season despite past events. The government recently evacuated Israeli nationals due to specific threats. This shows their commitment to safety. Residents like Miller Maoz appreciate the strong sense of community in Arugam Bay. Yet, strict business regulations remain important to ensure Arugam Bay stays peaceful and secure.