‘Govt. lacks mechanism to recover USD 40 billion spirited out of SL from 2008 to 2018’

By Hiran H.Senewiratne

The government doesn’t have any mechanism to recover the USD 40 billion that was siphoned out of the country illegally from 2008 to 2018 by Sri Lanka’s business elites, Senior Lecturer, Department of Economics, University of Peradeniya Dr. Kalpa Rajapaksha said.

“Most people think that the IMF loan is a victory for Sri Lanka without knowing its risk factors. These are exceptionally high because one of the main impacts would be for the banking sector whose liquidity is due to weaken on account of high tax impositions and certain economic reforms, Dr. Rajapaksha told The Island Financial Review.

Dr. Rajapaksha added: ‘The tax relief given during President Gotabaya Rajapaksha’s tenure triggered this issue, which cost government coffers more than Rs 450 billion. However, Sri Lanka has to carefully follow IMF recommendations taking its history into consideration. It is said that Greece and Ethiopia and several other countries absolutely failed by following IMF recommendations in the past.

‘We are in the dark as to the method of economic recovery because the government is attending to deeper, burning issues in the country, such as reduction of poverty and ending economic inequities.

‘The imposition of heavy taxes on people, especially professionals, via a wealth tax and a heritage tax by 2025 and the increasing of direct taxes, such as VAT, on low income classes, without taking into account the need for a wage hike, will iraise the poverty level and widen wealth inequalities.

‘Inflation at the global level is very high and strategies are required to increase exports and cut down the heavy import dependency of the economy. This is a prerequisite to address all economic woes.

‘The previous ruling party squandered and stole billions of dollars but the present government not having any plan to recover that money is a tragedy. Therefore, promoting neo- liberal principles is impossible under the current corruption scenario.

‘Further, the IMF has set the target of reducing the debt to GDP ratio to 0.7 per cent in 2023, along with their recommendations. Many people doubt the achievability of these aims.’