charindra chandrasena 00:03 Daranat Fernando. mr. Dhananath Fernando 00:04 Charindra Chandrasena. charindra chandrasena 00:06 Yasmin, how are you? Speaker 1 00:08 Doing good. Hi. charindra chandrasena 00:10 Daranat, you've had quite a week. The budget alone would have been enough to keep you busy, but you also had to had to respond to well, you you drew the ire of a of a prominent member of the government. Deputy Minister Chaturanga Besingha took exception to something you had posted and said that you had you were getting your information from some other show. What do you have to say to yourself? Dhananath Fernando 00:48 No, basically, we have been working on the state-owned enterprises reform. We, in the sense, like our entire research team, and also I want to, I mean, in particular mention because a lot of people see me being the mainly the outspoken person, most of I mean there's an entire team works behind it. So yeah, Rasmine and Tirani Satya, they are a big team who has been working on SOE data for a long time since our inception. On no on on this matter, no, I mean what what the I think the the argument was whether the state-owned enterprises are there are a couple of arguments which are one is whether there's a role for the state to do business which I understand not everyone is in the same view our stance is state should not do business I think in this case I think pretty much the argument was the whether the state-owned enterprises for the first six months, what has been their profitability? That's another argument, and there was another argument: the state-owned enterprises can be made profitable by appointing honest people. The right people can really transform. It's another argument. There's another argument for an example. What's the role of like countries like Vietnam, China, India, South Korea, Norway? They have some state-owned enterprise. Singapore has some level of like you know holding company. So what do we have to say? So there are multiple versions of these arguments. I think what I what we brought out was not we brought out in the the Ministry of Finance. They released the data for the first six months. It's a broader analysis of like not only the state-owned enterprises, governments, income, expenditure, and all that. So for the first six months this year, the the profits, the total profit, cumulative profits. It doesn't mean all institutions have made profits or all institutions have made losses. There are losses, there are profits, but the total was 227 for the first six months out of 52. Now remember, we have a list of about 527 state-owned enterprises. The others even the accounts are not out like whether to figure out whether charindra chandrasena 03:06 this 52 are the strategically important. That's what's the Dhananath Fernando 03:08 definition of the government. Whether it's every all 52 are strategic or not is a different Sri Lanka team book operation. Whether it's strategic or not, it's in the list. That's a very conversation. But that's a for for some time, those are the 52 strategy. So it's 227 for six for six months. But if you compare the last year's first six months, it was 280 billion. So there's a erosion of profits. So that was, I think, probably the point of argument. But charindra chandrasena 03:38 now he's saying you got this data from from whatever incorrect source, but you're saying your source is the Minister of Finance. Yeah, Dhananath Fernando 03:48 I think anyone can go and check on the Treasury.gov.lk. There's this media financial report which is about 50 pages, and the data is available on the 37th page, and they they themselves have compared it with the previous year, the profits and losses. So charindra chandrasena 04:07 right. So even the comparison is not yours. So the comparison you have taken from the Dhananath Fernando 04:12 yes minister of finance. Absolutely. Even if you go to that chapter on state-owned enterprises, the what I quoted was what was the exact even I did not any I didn't write it on my own, it was in the Ministry of Finance report. It basically says the profitability has come. I mean, it says it gives mixing mix performance. That's how you politically write it now, and they have given the here the it says on the OU chapter three performance of the state-owned enterprises. I am quoting the financial minister of finance report page number 32. It says the the main 52 state-owned enterprises within Prakash S. So is reported a mixed performance during the first six months of 2000. 2025, recording a total profit of 227.8 billion compared to 280.7 billion in the same period for 2024. charindra chandrasena 05:10 Yeah. So even in the one that he has shared, it it shows the 227. But for 2024, he has the full year figure. I think. Dhananath Fernando 05:20 Yeah. charindra chandrasena 05:20 Yeah, but so his comparison doesn't include 2024, the first six months. Dhananath Fernando 05:26 Yeah, it's just from the same report. Yeah, exactly. The chapter three. Yeah, but you can actually check that 227 if you go to the previous years, the same report. charindra chandrasena 05:34 Yeah. Dhananath Fernando 05:35 But I think that was the that was the definitely we. I mean, we do we. I mean, we are struggling to get the data from the institutions because we only publish either it's through the Ministry of Finance or the annual reports. So that's where the data comes from. But I, with all good intentions, I, I mean, I just wanted to bring the data fact out and not to go for any argument or anything. charindra chandrasena 06:01 I mean, if he's saying the data is wrong, then isn't he saying that the Minister of Finance data is wrong? Dhananath Fernando 06:07 I I don't want to comment on that. It's basically what I want to say is I took the data from the Ministry of Finance. Anyone, any it's a public report. Anybody can see it from the Ministry of Finance report. And I think the the larger argument that I would like to bring charis, there's a sentiment that okay, this let's say forget that whether they made profits or losses compared to this year better or worse. There's this 227 billion profit. No, lot of people think this 227 billion rupees is owned by the people. This is getting distributed among the Sri Lankans, so because of that, you should keep running it. But in the same report, you can see how much these institutes have been given to the treasury. Because ultimately, the there's a fundamental concept that we all forget in business: the profits of a business should not be the Ministry of Finance. Even if you do like a small tea shop, the profits is for the business. The owner cannot take the profits out. If you are taking the profits out, you are doing more harm to the business because profits are to be reinvested on the business to expand. That's why even a legal entity, when you're registering as a private limited company, the ownership, the the business is considered as a person. So the profits are for him. What is what can be taken by the owner is the dividends, not the profit. So if you look at how much dividends these state-owned enterprises have given to the treasury? It's about 8% charindra chandrasena 07:49 Right. Dhananath Fernando 07:50 So this all 227 billion or like even one year, they are not. I will give you a classic example. In 2024, People's Bank for the entire year they have made a profit of 41 billion. Bank of Ceylon made 106 billion profit 2024 entire year. Remember 106 billion Bank of Ceylon, People's Bank 41 billion. Can you guess how much dividends People's Bank gave for the treasury? charindra chandrasena 08:33 How much? Dhananath Fernando 08:34 Any guesses? Zero. Okay. Right? It's zero. Right? Let's go to the Bank of Ceylon. Let me try to find out from the. Yeah, I cannot even see it in the. Sorry, sorry. People's Bank zero, Bank of Ceylon zero. So the two main institutions which has made massive profits. I mean, if you can calculate the profits. Sorry, am I taking too long? The two two charindra chandrasena 09:11 largest state banks. Two large state banks. Dhananath Fernando 09:13 Yeah, in in Sri Lanka, who have made enormous profits. I mean, their profitability of SO is mainly coming from three banks: People's Bank, Bank of Sidon, NSB, National Savings Bank, and then if you make a profit, it's a CEB, CPC because of the monopoly status. CEB, of course, you can make CEB profitable very easy. You just need to jack up the prices or like the rates, tariff by 6% 10% It will it will capture all the profits collectively. Even you, even the John, they can exceed John Keel's profitability because that's the one of I mean largest, pretty much organisation. So those two really haven't declared any dividends to the state. Who has given dividends was poor. Petroleum Corporation, National Insurance Trust, those are the guys who have given like dividends, declared dividends. Airport Aviation, yeah. So charindra chandrasena 10:13 Dana, now because you brought up banks, and I want to move on to the budget also on this, but one of the classic arguments that is made by proponents of, I mean, opponents of and sorry opponents of privatisation is that the private sector is profit driven and therefore will not do anything against their own interests, and especially financial interests, and therefore will not work in the public interest, right? So, because you brought up the banking sector, one example could be that a state bank would go to a very rural area in the country, which which has low volumes, and set up a branch there long before it starts coming up as a as a region as an area, and the private banks start going there. Yeah. So that trail is blazed by the state bank, and if not for the state bank, that segment of the population would not would not have access to those services in the same way. Dhananath Fernando 11:25 Correct. No valid argument, Shari. No two words about it. And that is that is the evolutionary process of also the state-owned enterprises, because for very like highly capital-intensive businesses, including at one point hotels because not many people were investing in hotels like about 5060 years ago. So actually the state had to do hotels. Not many governments or sectors were investing in airlines, so they had to invest on airlines. So that's why they how that's how they entered the business. But the point is, if you really want to support, you don't support it by doing a business. The structure has to be supporting it in a different way. For an example, Chari, now there is a case all of us may get ill and the ambulance may not turn up. Just risk is there, but it doesn't mean that we are going to buy an ambulance in case if he falls in, right, and some people may not be able to afford an ambulance, but it doesn't mean that we have going setting up like you know a separate ambulance company to do it. What you do it is you take it care. I mean, take care of it in the back end. You provide them additional support in a different mechanism. Agree that the banks, if they are not reaching out, then you give like incentives for banks. Okay, if you are opening a branch now, same thing even in this budget did. If you are investing in north and east, your capital expenditure allowance is higher than investing in somewhere else. So that gives an incentive for you. Link it with the incentives. When you try to do it as a business and support with all good intentions, there are no nothing wrong with intentions. I am saying the effectiveness or the efficacy would be lower. If you really want to support people, I am 100% You set up a separate ministry or something, support them directly through that. Then you are not confusing with objectives because when you are going to do businesses, and if you are trying to make money and you know support people through business, it's contradicting because you are doing a business to make profitability and you have to be competitive. And if you really want to support, you do it as a charitable thing or a ministry. Now, education ministry has no objective on making profits, and definitely there has to be an education ministry. No one is questioning about how much education ministry spend now, whether they made a profit or something. It's a it's a ministry. You do it through the ministry. Yeah, but don't try to set up a government to run a university and say that we are going to make profits, and then we are going to invest that profit on developing the education. Okay, so charindra chandrasena 14:06 I think the the maybe the closer example is state schools and state universities. I suppose that's what you're talking about, right? Because ministries in involvement and ministry is necessity. I don't think anybody's contesting that. Excellent, not necessarily. state state schools and state universities. You are saying, Dhananath Fernando 14:27 Rani, I mean, states support with the Ministry of Education, but but if you don't, you don't try to do a business and support him because it's contradicting Mujahid. I mean, there's a famous saying that the business of business is business, you know, so you have to run the business like a business. When you try to bring other objectives to the business, business, then your business and your objective both collapse. Are single intire naya tadi imagekamana ti? So when you try to do these sort of all sort of. Stuff you lose, and exactly that's what has happened. I mean, I have told it multiple times. When petroleum corporation make losses, sorry, CEB make losses, they borrowed money from petroleum corporation. Now what happened? The CEB issues has spilled it over to petroleum corporation. Then Petroleum Corporation scratching their head and thinking, what are we going to do? Okay, one good brilliant idea. We lost Sri Lankan Airlines only to buy fuel, jet fuel from us, and at very high cost. Now what has happened? Sri Lanka Nya Airlines buying buying fuel at exorbitant rates, and you know fuel cost is one of the main cost factors for the allies. So it's charindra chandrasena 15:40 a disease. Absolutely. And now Dhananath Fernando 15:43 everyone is blaming Sri Lankan Airlines, including not blaming, like you know, asking them to. I mean, poor Sri Lankan Airlines, they had to buy. Of course, they have a lot of mismanagement and all that is true. But that is how it evolves. Now the problem of CEB had ended up in Sri Lankan Airlines. Now all those people have gone to People's Bank and Bank of Ceylon. Now they have now. I'm also saying the People's Bank and Bank of Ceylon. They have extended credit for about 600 billion. 600 billion for these institutes. Now you can see the problem evolving. If it's a private bank, you declare bankruptcy. Then it's over. Now you have come up with good intentions, but now look, we are we have ended up. Even the president has mentioned now he is going to absorb most of the state enterprises liabilities and clean it up. That means the tax taxpayer is going to take the bill. So that's where we need to understand the first principles thinking rather than just carried away just with profit numbers or just with loss numbers, and also identifying that evolutionary process, there was a time when I don't think anyone challenged that. As I mentioned, the Hilton Hotel, the Oberoi, those were even the Trans Asia or like the cinnamon, cinnamon, not the cinnamon grand, cinnamon lakeside versus state hotel at one point, because no one invested for tourists to come, and of course state did their role. But it doesn't mean that you you know keep it forever. You know it's just because that you need an ambulance doesn't mean that you own it and park it at your garage every day, just because in case if you fall sick. charindra chandrasena 17:25 I think the government is now coming to this realisation, right? That because there are things being said like Andu business karanona and all of that. So I think they're gradually coming to that realisation, and maybe you know that will that's part of the evolution of of the party as well. Speaker 2 17:43 Hopefully, charindra chandrasena 17:43 hopefully, hopefully. Yes. I think we have to Dhananath Fernando 17:45 give Yasmin the chance. She has been more. I mean, she had been working hard there. I got in the spotlight, but on the budget. On the budget, yes. charindra chandrasena 17:52 Now we are moving to the budget. Yasmin, what are your overall high level thoughts? Speaker 1 18:00 Is charindra chandrasena 18:00 it is it a growth budget? Speaker 1 18:04 I think yes. I think yes because at least we see policy continuity. I think that's the main thing. Like I don't think. I mean, we were just discussing that doesn't seem to be too much of a difference between the 2025 budget and the 2026 budgets. Most of the policies, most of the things that were, you know, they said they would do previously, it's still continuing. So we're not seeing any sort of backtracking or anything like that. I think, you know, I mean, personally for me, I wish we had seen some, you know, better proposals in some areas. For example, when it came to women, I think that there was just only one proposal related to I think money that's allocated or set aside for entrepreneurship, but like I think I mean even that this is what always happens, right? Like money is always set aside for entrepreneurship, but how and some of those processes are not yet outlined, right? And maybe maybe the budget speech is not the best space to do that, but I think through the years there should be some sort of like it. It should be outlined like how will how will that sort of play out. So that was one thing that struck me. I think we were also discussing how you know there's a lot of money that's being allocated in terms of construction and housing, but like I think the bigger thing that has not been addressed is like this issue of high costs of construction, because nothing has been sort of you know proposed to address that as a big problem. Because if you want to really see growth, you want businesses have to come and set up here, right? And to do that, they need to find it viable to come and set up here. And one of the biggest cost factors is the cost of construction. So those were some of my preliminary sort of highlights. I mean, observations. Sorry, but yeah, I think. Dhananath Fernando 19:45 But what has been said was very interesting. The consistency is also, in a way, growth friendly. Speaker 1 19:50 Yeah, Dhananath Fernando 19:51 I found it very. I mean, you know, a lot of people think like, what more proposals are there? Yeah. Sorry. Yes. No, no. But the consistency. But when it comes to consistency. charindra chandrasena 20:00 Consistency can lead to growth, but can it be leapfrogging growth, or is it just going to be incremental growth, which is not at the speed that we need to be growing at this stage? Speaker 1 20:16 I think the more important question is like, okay, yeah, the good thing is that there's consistency, but like, like what's the level at which this implementation will even happen? Like, you know, I think that's the bigger sort of question. So, I mean, there are some very important structural reforms that the government needs to undertake in order to sort of, like, you know, achieve growth. Right? Some of them being the state-owned enterprises, like reforming of state state-owned enterprises. So I think you know they've said now that they're going to fast-track the bill. They're going to present it in parliament. That kind of promise is being made, but we don't know, right? But Dhananath Fernando 20:54 I think adding to what Yasmin said, her point on implementation, because Shari, most of these leapfrog reforms, pro-growth, are already in the budget and even in the previous budget. For an example, this BIM sabia, which we proposed. No, I'm not. We are not saying because we proposed it. Of course, it's a programme which is existing, and then even the tariff structure simplification, which was also highlighted this time, is already there the investor protection legislation that they are going to bring, the SOE holding company, public-private partnership act. If you recall, there was also a conversation. I cannot recall it was under this president, but even the previous budget on bankruptcy laws. Those are all leapfrog growth reforms because how the growth comes, it's not by government investing more and more money. They have to do the investment on on public you know infrastructure, which actually they are considering. They have allocated money for digitization. President has committed 4% capital expenditure from the budget as a percentage of GDP, charindra chandrasena 22:04 this infrastructure-led growth. Your what are your guys' your your view on this as as Advocata and maybe even individually? Because there's a school of thought that believes that that is not really sustainable, right? Because yeah, you create jobs, you create a certain economy around these infrastructure projects, but it's temporary and it's not the best way for long-term growth. Dhananath Fernando 22:30 Correct. Now, how I see it, Yasmin, you will take a stab at it. Yeah, I mean, Speaker 1 22:34 I think the prime example would be like all the construction and infrastructure development that has happened in Hambantota. But like, do we really see the economy there? Like, charindra chandrasena 22:44 when when you take Hambantota as an example, I don't really want to paint infrastructure with that brush, right? Because Hambantota, I feel, is a is a is an exceptional case because the infrastructure was put up without the conditions being right for it, right? But but if you take a more developed area, which is more central in terms of the economy and and connectivity, I think there is a place for infrastructure development. But even in those, so so we'll forget about the bad example of Amandad. But tell me from a very moderate lens, and I say a moderate location, is infrastructure-led growth the way to go for Sri Lanka? Speaker 1 23:30 I think it has a role to play. Yeah, it Dhananath Fernando 23:33 has a role to play. The thing is, Cherry, when you are saying infrastructure-led growth, there are certain infrastructure which is needed to grow. For an example, the let's say the airport expansion that is needed for growth for tourism and the downstream growth. So that is required. When we say infra, what happened the that you know infrastructure led unwanted growth was because we have to keep the again the first principles in mind. Construction is a non-tradable. That means it's not open for competition. If it's like exports, that's why we say the growth has to come from exports. Because growth can come in multiple ways. No, you can borrow more money and grow. You can build more things by borrowing money and grow, but when it comes on competitive environments, like where you produce something which is world class, competitive, you trade. That's the growth that we need. But when it comes to infrastructure, there are basic infrastructure which is required, which facilitate growth or which helps to other industries to be competitive. For an example, if your electricity rates are competitive because of some government infrastructure, let's say if they do a massive like water reservoir or something which the private sector really do not have the you know interest to do it, then by bringing down the energy costs down, you are making most of the upstream. Downstream industry is competitive, so in that sense, it's in a way infrastructure. That infrastructure investment will also continue to grow, but that the the the output of that infrastructure investment will have a massive spillover effect for the private sector, for them to facilitate more. So I think that's what we mean. So that's why you are not overspending. You are only keep it at 4% which is in a way reasonable. On the other thing, we have to look at where the government is going to finance that 4% to build that you know infrastructure. Because ultimately the banks only have you know limited money. You know, so if they are extending it only for the government to build this infrastructure, if the there's no money for the private sector, they will be in trouble. So there, you have to check where the money also comes from, whether it comes from a more competitive environment, because then the credit flows from where where it is needed the most. Because you can only have credit when you know this is compatible. For for an example, you know if the credit is available on a competitive basis, then the investor can think okay, whether it's more feasible to invest it on a solar, or whether it's more feasible to invest in a road because he can say okay solar I get a better you know ROI ROA, but road may not. So automatically, your limited credit goes to a productive output rather than an unproductive output. That's where we have to strike a. We have to be cautious. But infrastructure is needed. That's what the public could not. I mean, the private sector could not provide, and even come into the SOE argument. That was probably the objective that the state invested their money because they thought when you invest in a hotel, there are more job opportunities created that will create cottage industries and all that. Here now the phase has advanced, things have evolved. So we have to look at public infrastructure. Yeah, one charindra chandrasena 27:02 example would be the the Colombo Kandy the Central Expressway. This was way because not just candy that that is going to benefit so many towns along that stretch, and it's going to make travel to Andradepura and that area easier. It's just the below even the east coast is gonna the the distance is gonna be cut down, so major benefits through that, and I don't know why it took so long in the first place, but now that's good infrastructure. Right. So what's Dhananath Fernando 27:32 your yeah no also yes no absolutely what's your sentimentary like in terms of president said it's 4% on public sector and you feel the growth is not covered enough in the budget? No. charindra chandrasena 27:43 So I'm. I'm just wondering, what is going to be? So, what is the main driver of growth? Because digitization, I'm still unclear how much growth it's going to create immediately, Dana. For me, the immediate benefit would probably be in terms of maybe cutting costs, especially for for government services. If if you get rid of the paperwork and you make it more efficient, more convenient, then I feel like the costs will come down, and yes, I suppose that will lead to greater profits. But I'm thinking in terms of national level growth, whether digitise digitalization is the one that's going to get that us get that for us immediately. What are what are your thoughts? Am I am I wrong on that? No, Dhananath Fernando 28:41 I think on the digitization, that's it will take a little bit of time, but that's a long, long haul game because even if you look at this budget, there's a little trick, not a trick. There are no new no new taxes. charindra chandrasena 28:55 Yeah, I mean no new taxes, but then when you lower the absolutely lower the threshold, absolutely, it is a new tax for the people who didn't get that tax early. Not only Dhananath Fernando 29:04 that, with that they are going to introduce, if it all works, premise 3.0. That collects everyone's. I mean, it makes the system more efficient. Then they are going to introduce an invoicing system. That means all invoices that you raise, so then pretty much everyone, whether you are under the VAT threshold or above the VAT threshold, automatically indicated, and then they are going to implement post machines to most of the outlets. So then it's like more, you can see the sequence that it is coming. So digitalization is needed for that, and then the next, if you listen to the. I mean, the budget speech also highlights about the land and you know giving state land and digitising it and all that. Some bims of here or something. Some land management system flavour is there. So all that you can see coming, but it requires its own sweet time. Unfortunately, yeah. So I'm charindra chandrasena 29:58 thinking 2026. Is there anything that's going to get us, you know, that level of growth boost? And I don't know whether I saw anything, but in the long run, yes. Because now the digital ID, I heard that they are putting out the first one in March, but I think for it to be fully implemented, they are thinking maybe 2028. That's that's what I've heard. So that's a long haul, like a long game. And I think once that happens, that's going to be a paradigm shift in in the economy in Sri Lanka's, you know, access to services and all of that. I'm just thinking about 2026. What are your thoughts, Yasmine? Speaker 1 30:39 No, I think you're right in the sense that it's most. I mean, when we say they are growth-inducing proposals, like we will, there is potential for growth. I don't think you will see growth next year. Like they're all, they're continuing to like sort of lay the building blocks for growth that you know is more sustainable. So that's what I said earlier. Like policy continuity is one of the biggest things that you can sort of sort of rely on for you to because you're you're working towards a path you're working towards a defined goal. So when you ensure that there's consistency between budgets, then obviously I mean because I guess when you when you have a previous administration that did something and a new administration that comes in and they change the policy all over. Time is delayed, you know. So it really does pull back on the growth, you know, trajectory. I mean, let's take for example the SOE bill. Like, I mean, even the previous administration said they were going to pass it. They were going to pass it. It never went through, right? And then when the new administration came in, there was this need to sort of re-examine what the previous administration had drafted, and so you know, like time, time gets sort of you know it goes right. So then obviously the potential to see growth faster is also delayed. So I mean that's just my two cents, but yeah, Dhananath Fernando 31:56 yeah. I think the growth challenges anyway there. We have to work. Likely, it may come also to an extent from you know public infrastructure development. But we have to definitely do that legislation changes to take it to the next stage for sure. Because otherwise, we will stuck here. And the other, I mean, things we could have improved waschari. I felt there are a lot of small, small, small allocations, like number of us, like hundreds of small allocations. But I felt it could have if we had like you know overarching strategy that how we really see it could have been better. I'll give you one example now. If you go to 2000 this year February budget, there was an allocation of 303,000, million. That's 3 billion for the Metrobus, which is yet to be implemented. I think there's conversation going. There's some work happening there. charindra chandrasena 32:54 Yeah, there is a launch recently. There is a soft launch probably. Dhananath Fernando 32:57 And this year we allocated another 6 billion against a public infrastructure, but for the double caps for parliamentarians, whatever I think definitely they need need a vehicle, and good that president said no permits, 100% you know respect, but it's 12 point 5 billion. So you give a signal that your public, of course, the 6 billion is the new investment anyway for SLTB and all that. There may be for railway department. There are recurrent expenditure. All that is anyway captured separately in the recurrent expenditure. This is new proposal. There's a you know, there's a, you know, two directions. So you are giving 12.5 billion for, you know, 225, and you are saying it charindra chandrasena 33:49 sends the wrong signal. It gives a wrong to the public about what the priorities of the government are. Dhananath Fernando 33:54 Absolutely. So that's where the we should not avoid the capital expenditure. So I think the that's why I said incentives matters because I thought what they could have thought was we give a vehicle allowance based on a criteria. You know, if you are ampara district KP, your vehicle allowance may be slightly higher. Four allowance is anyway higher. Then you are not now when you buy, you know, 1000 not cabs. You have to make take care of the maintenance, insurance, parking, drivers, everything. Right? It's a nightmare. You have to have a separate office running fleet of 1700 vehicles. Is no joke. I mean, even running your own vehicle is a difficulty to make sure that it's licence on time, insured on time, and is also difficult. Imagine 1700. This is like a separate operation. You don't have a separate officer on it. Isn't it easier that you give like an allowance for MPs? You give 300,000 or some allowance for vehicle. You use whatever the vehicle you want. It can be double cap. It can be a tuk tuk. It can be a VA. Who cares? If you have money, you give add more money, or you can buy your. Vehicle, you can lease it. You know, you need to charindra chandrasena 35:02 give it a minimum amount. Dhananath Fernando 35:04 Minimum amount charindra chandrasena 35:04 to make it possible. Possible. Dhananath Fernando 35:05 So then economy works, and good that it's not coming as a permit. But could have thought whether there are some separate. So then it's instinctive, and also person who owns the vehicle taking care is also better now because now in someone else's vehicle, they will use it for all sorts of things, so that's where the thinking has to come. I think that's and also I think what President could have done was because the strength was 2025 revenue numbers were extremely good, right? Because we have pretty much exceeding the revenue targets, not the budget deficit. I think a little thank you note for the taxpayer could have made a difference because people were complaining about the. I mean, you remember 36% you know, the highest threshold, 15% on dollar revenue services. Just to say, I am here because, and I am starting with a very positive note. I am bringing confidence. We have achieved the revenue targets. Also, thanks to people who contributed, and we haven't. You know, it's an emotional thing. I'm surprised that he missed it. You know, that gives a not that we understand you are paying it with greatest difficulty, and I have assured that I have given my best to save your money. Yeah, I charindra chandrasena 36:17 suppose that I am also surprised he missed it because it's not. It's unlike him to miss a moment like that. Seems to know his moments. No, but I think the argument that he may may make is that people are more willing to pay their taxes because they know that we are going to not misuse and and that is not going to go for corrupt purposes. So as a he could take some credit for that as well. Jasmin, Dhananath Fernando 36:46 you have some data to, Speaker 1 36:48 yeah, no, I mean, just our team just just crunched the numbers a little bit, just very basic comparisons between last year's budget versus this year's budget. So, just in terms of our revenue itself, like I think, it's obviously like we're estimating that we'll collect more than even last year. Last year it was about 5040 2 billion rupees. This year we're aiming to, you know, collect around 5300 5 billion rupees. So that's about Dhananath Fernando 37:16 200 billion more revenue that we are planning to collect. Speaker 1 37:20 Yeah, yeah. Then in terms of expenditure, also like well, the good thing is that we have a little. I mean, actually, it has increases, but but a little bit, actually, just a little bit. So last year it was around 8830 5 billion rupees. This year it's 8000 980 billion rupees. So that also, I think, I mean, it's just coming from. I mean, both recurrent has also like reduced. Capital has also up. Capital has increased. That is where I guess the increase is coming from. So last year recurrent was 5900 20 billion rupees. This year it's 5722. Last year, capital was 2900 15 billion rupees, and this year's 3258. So there is significantly a lot more we're spending in terms of capital expenses this year. Yeah, charindra chandrasena 38:12 because last year was about stabilisation mainly, right? Now they have to think about some sort of development. So Speaker 1 38:17 yes, that's yeah, that's true. Yeah, and I guess I also just have like in terms of like the main ministries that people would be most interested for. Interesting, it Dhananath Fernando 38:26 has moved away from the defence. No, early because everyone complains about defence. I think still it's a. It is one of Speaker 1 38:32 the highest. It's one of the highest. Like at least you see bigger. Like for example, health is much more right. So yeah, like health last year was four 442 billion. This year it's 455 billion. Anyway, that's a natural increase every year because of all sorts of reasons. It sees an increase, but at least it's not one of the top highest, right? And health is charindra chandrasena 38:52 bunched together with the media ministry, right? So these days we don't really know exactly how much health is getting. Yeah, Speaker 1 39:00 education, higher education, and vocational education. Last year was 272 point 9 billion, and this year it's 301 billion. Transport also it's transport highways, ports, and civil aviation. Last year it was 487 point 5 billion, and this year it's 446 billion. So, yes, those are just some very key statistics, I guess, for people to take away into the expenses. charindra chandrasena 39:26 That's interesting, but like before we wind up, just one thing, and one of you can answer this or both. The president took paints to introduce to to rather reiterate that there will not be an issue with our debt repayments in 2028. He said that this 2025, the debt repayments were a percentage higher, was X percentage higher than 2024, and then the. Paying it all, and the the the debt repayments in 2028 are only going to be a percentage higher than they are this year, if I haven't got it wrong. So that the the 2028 percentage is going to be only a little higher than the percentage from 24 to 25, percentage increase from 24 to 25. So he's saying, don't worry, we are the government that's going to be there in 2028. We will pay it off. You agree? Dhananath Fernando 40:31 Yeah, very interesting question, Chari. I'm glad that you asked that. Now we need to understand how this game works. This is this works. You know, there's a famous saying: How you go bankrupt, you go bankrupt slowly and suddenly. Now, in this momentum, very unlikely that we will default because everything is functioning well. But generally, this default risk or like debt repayment challenges comes with a trigger event because everyone sends remittances, tourists comes, everything happens in a normal environment. One trigger event, everything is going to you know shrink. So president is right. If this momentum, this that's why we you remember we always say keep the stability, don't deviate, stick to as as much as possible to the IMF programme. Of course, IMF is not a you know solution for all problems, but you cannot really deviate because that that framework is set to run the machine. One trigger event can collapse. So president is absolutely right. Now I think incremental, I mean increments are small, so we can pay. But the challenge comes if there is an unfortunate event. It could be a weather event. It could be some, you know, geopolitical event. It could be anything. In that context, we may face a challenge because, as we already know, then even the we are we while we have recovered, our credit rating is still at a sea level. So, in a way that we are not fully recovered in that sense. But of course, it will take time. But absolutely, you can pay, but you know, cautious of a trigger event. Remember, in 2015, there was central bank bond scam. 16, there was drought. 17, there was drought. 18, there was constitutional coup. 19 there was Easter attack. 20 there was COVID. 21 there was COVID. 22 there was economic crisis. So there were a lot of trigger events took place, and I think that was like a Kendrick and Rao Kalri apalama kari rasta yati. But luckily, buda. So 2023, 24 touch wood 25. There were no extreme. No, but this charindra chandrasena 42:48 trigger event theory is interesting because 2020. The at the turn of that decade is when the tax cuts were given, and then in March, I think march 19, maybe. Okay, lockdown. So I'm thinking, would the lockdown have affected us so bad if those tax cuts were not implemented? But I think we were we were heading we were on a bad record, anyway, in that year, without the tax cuts even. But I think the tax cuts has exacerbated the issue. So I'm just thinking that that trigger event could have been COVID, but then there were conditions for COVID to create havoc as well in the economy. Dhananath Fernando 43:36 Absolutely, you were spot on because you know one bad mistake can sometimes you know you can survive it for some time, but when you have the combined impact of all events, charindra chandrasena 43:46 exactly, Dhananath Fernando 43:46 then that's where the suddenly part comes in. charindra chandrasena 43:49 Yeah, because at the at that time it was all about saving lives, so they just that's one of the strictest lockdowns we had in the world. So like, don't put your foot out of your gate even like during the COVID. so yeah, I mean, interesting. But your final thoughts, Jasmine? Speaker 1 44:07 No, I think we're all good. I think Dhananath Fernando 44:09 I think the implementation is the next challenge, important thing. And yes, and even now, VAT by bringing the threshold down means I think a lot of businesses has to be cautious. Not cautious. They need to understand how they will be prepared to pay VAT, because 100,000 a day. If you are earning 100,000 a day by doing a trading business or anything, that means you are we are falling under VAT. Basically, Rahima, a few steps from here, pretty much you will be liable for VAT. 100,000 is nothing. I mean, daily collection, 100,000. Of course, yeah, it's a small amount, so that. But the real impact will come from the also the SSCL threshold has brought down. Now the VAT is one of the best tax systems in the world because you are only paying for the value addition. The Rahima, same example, they bring rice, they bring spices, they cook it, so they can actually they have to only. Pay the VAT for the value addition that they do. So they bring probably they cooking and that whatever their recipe and serving and that they have to pay VAT rice and all that they can deduct it, but SSEL they cannot deduct. So if their supplier rice supplier basmati supplier whoever has to pay SSCL, that will add to when Rahima do their cost purchase. So then now their material cost is going to go up by 2.5% Then that has to be, you know, incorporated their cost in a bond effect. And if we are supplying through Rahimas, that has to be added. If you are using Rahima's biryani as an input for this seems like free publicity for Rai. I know, right? You know, if you are using it for you know for something else, then we have to charge it on top of it. So then there's a cascading impact. So that you have to be cautious. Maybe we should go and ask for some bijani from Rai. Sorry. We saw the sponsor. charindra chandrasena 46:00 Well, hopefully, hopefully it will help them improve their quality because I was I was a fan back then. I was a fan back then, but not so much now. But yeah, okay. Thank you guys. Thank you. Thank you. Thank you. Subscribe. Tell subscribe. Dhananath Fernando 46:15 Subscribe Advocata Institute first. We charindra chandrasena 46:17 later tell. Yes. Speaker 1 46:18 People should like, comment, share, and subscribe to Advocata, and Dhananath Fernando 46:23 also the Advocata Insider. I think we are bringing quite interesting content, specifically for the small and medium businesses, and also one reason. Now, this is the important thing. Now, a lot of this free content brought to our audience is because of the Advocata's insiders, and while you can get like free content, there's another reason why you should support us. That is, Chari, you know, being an independent think tank is all like independent on any sort. It could be media is not easy because you get shot by both sides, right? So I kindly request because we are trying to bring a political, non-partisan view. Of course, people who are watching has political views, people who are associated as political views. But we are trying to bring on a more data-driven approach. We may do mistakes because this is also important. Even if you have a political affiliation or a view, it's always important to know what's the neutral views. We can only do that with the support of our insiders. So that's why we highly recommend because charindra chandrasena 47:30 the think tank space is not a lucrative space as such. Absolutely, right? This is not a lucrative industry, so it is not easy to keep going on, and especially if you are not being, you know, funded by one political party or another, then you you you have your coffers are fine. But if you are trying to be independent, then it's it's a bit difficult. So so Dhananath Fernando 47:53 there's interesting good reason because otherwise you know the politicians also easily target the think tanks because it's easier because that's how the politics works. But you know you can keep us independent and we will also be accountable to you because then we know again we are as a think tank also open for market forces because if you don't provide an independent view, then we are losing our you know subscribers and insiders. So we as a think tank also want to bring that market sentiment, you know, to be open for the market dynamics, to be you know to provide a more balanced, nonpartisan and independent data-driven analysis. So yeah, become an insider. charindra chandrasena 48:35 Right. All right, Anat. All right, Yasmin. We will see you next week. Dhananath Fernando 48:39 Next week. charindra chandrasena 48:40 Yes. Transcribed by https://otter.ai