UNP advisor Ashu predicts drop in cost of living by next March

By Rathindra Kuruwita

Sri Lankans will experience a significant drop in cost of living by March 2023, advisor to the UNP Ashu Marasinghe, said on Monday in Colombo.

Marasinghe said that the current situation in the country was grave. “The situation today is bad. There is no way we can hide this fact. However, there are signs that things are improving. President Ranil Wickremesinghe has said that we need to swallow bitter medicine in order to get out of this mess. It was the disastrous policies taken by the previous government that led to this,” he said.

Marasinghe added that President Wickremesinghe was leading the economic recovery and that the government had a plan to overcome the current crisis.

“There are some people who say we are blindly following IMF policies. This is not true. The VAT was at 15 percent before President Gotabaya Rajapaksa reduced it. We lost hundreds of billions in revenue because of this and it was the beginning of the economic crisis. Although he reduced VAT, the prices of goods didn’t come down. Production didn’t increase,” he said.

In 2017, Sri Lanka experienced a surplus in the primary balance, Marasinghe said. The country was on a relatively good economic health, in November 2019. However by 2022 the situation had deteriorated to such an extent that even those who hate the IMF were compelled to consider it, he said.

“We have to rise from this crisis, and we need to manage the economy. State revenue must go up and we need to change the tax regime. President Gotabaya changed the tax regime to benefit big businesses. I am sure they became richer, but the country became poorer. The direct and indirect tax ratio now is about 30-70 percent. We need to at least increase revenue from direct taxes to 40 percent”.

Currently, there are signs of recovery in the country. The prices of goods and services have decreased slightly, he mentioned.

“The inflation has dropped. Food inflation too is dropping. We have a number of initiatives to boost agricultural production. We are getting fertiliser that the farmers need. Food production will increase and by March 2023, Sri Lankans will experience significant price drops,” he predicted.