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High interest borrowings and 14 tax concessions that robbed country of revenue culminated in economic crisis

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General Secretary of the Communist Party Dr. G. Weerasinghe and researcher Shiran Illanperuma with the policy programme.

–     CP General Secretary

By Rathindra Kuruwita

Sri Lankan governments, since 1977, had given 14 tax concessions during 42 years, and they had led to a decrease in state revenue and culminated in the 2022 economic crisis, Dr. G. Weerasinghe, General Secretary of the Communist Party of Sri Lanka (CPSL) said in Maharagama on MOnday.

Speaking at an event to mark the 80th anniversary of the CPSL and the launch of their manifesto, Idirimagin Idiriyata, Dr. Weerasinghe said that the state had lost non-tax revenue due to the privatisation of public ventures in the 1980s and 1990s.

“Almost all governments, since 1977, have followed policies that were inimical to the agriculture and manufacturing sectors. We moved to low paying and low-productivity service jobs. It is a well-known fact that all nations that joined the developed nations club in the last 60 years focused on labour intensive manufacturing and boosting agricultural productivity. This is the history of development, but we have decided to ignore it since 1977,” he said.

Dr. Weerasinghe said that the institutions set up to ensure adherence to the Washington Consensus, i.e. World Bank and the IMF dictates, had encouraged deindustrialization in Sri Lanka.

“In fact, a 2003 agreement we signed with the IMF says that the Sri Lankan government will not take steps to develop industrialization,” he said.

The CPSL General Secretary said that as the state had lost both tax and non-tax revenue, it was compelled to borrow, especially from the International Sovereign Bond (ISB) markets.

“We started borrowing from these markets in 2007. Up until 2015, we borrowed about 30 percent of our total debt from ISBs. Between 2015 and 2019, we borrowed over 13 billion US dollars from these markets. These bonds are held by companies based in the US and the EU. They are literally poli mudalalis (loan sharks). Borrowing from these markets has ruined us. However, there is a big campaign by the west and its local allies to place the blame on China,” he said.

The new CPSL manifesto presented an alternative model for development based on science and industrialisation, Dr. Weerasinghe said.

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