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Message: <blockquote data-quote="monson" data-source="post: 28080225" data-attributes="member: 30005">TE: What does it mean in practice to say that you want to establish the legislative framework for a competitive economy?RW: Firstly, budgetary. You take the fiscal and monetary steps to get your deficit down. At the same time you have to look at the legislative steps that are necessary to build a highly competitive, export-oriented economy. We did this back in 1977 when I was in the cabinet. We brought in legislation to open up the economy.TE: So can you give us two or three examples, for the short term, for the budget, on income tax, VAT, SOEs?RW: You will have to raise taxes, you will have to tax capital, tax wealth. The tax net has to be widened. And that will bring some of the lost revenue. By about the middle of next year, we’ll have the same, or we’ll even go beyond the tax net we had in 2018.TE: You’ve also mentioned you want Sri Lanka to be not just upper-middle-income but upper income in 25 years. What are some of the things you need to do now to make that happen?RW: That’s a question about how do you open up? Before that, we’ve got to handle the whole issue of banks. We are looking now at disposing of some state assets, which will give us about $2bn-3bn. That’s the groundwork. Then to open up we have some of the reports we used in 2018-19 that you could implement, but basically integrate yourself with the region. In South Asia itself I can’t see very much regional integration. So we will look at closer relations with ASEAN [Association of South-East Asian Nations] and RCEP [Regional Comprehensive Economic Partnership Agreement, an Asian trade pact].TE: Apart from Sri Lankan airlines, what are some of the marquee SOEs that could be privatised?RW: Well, you can sell Sri Lanka Insurance, there’s telecoms. What we do with the petroleum corporation is another question.TE: So open up the petroleum market to other players?RW: Yes, we’ll open up investments, but we have to talk to all holders of concessions because some have been running for over 40 years. Laws governing the offshore economy also need to change. We’re looking at Ireland as a model for that.TE: What are some of the immediate laws you’re going to bring in?RW: A law similar to US Chapter 11 bankruptcy is one of the most immediate. The rest are about economic stability. We’ve also got some additional powers for the next year and a half to tackle the situation.TE: You mentioned a few laws that you said you’re going to bring into parliament. That’s what I was referring to.RW: Well this process will go on into 2024, company law has to be amended, a whole lot of commercial laws, we are looking at ease of doing business. So that means cutting through so many regulations. There are so many laws for how to operate even a basic item—there are so many authorities running by themselves. I’m also looking at the BOI [Board of Investment], we have to look at the overall investment effort of Sri Lanka. I’m not satisfied with it. The money we put in we haven’t gotten back. So I suppose in one way this is a disaster, but it’s also an opportunity to create something new, like we did in 1977.TE: How much are the things that you were just talking about part of the demands from the International Monetary Fund, and how much goes beyond that?RW: The demand is actually always tabulated for the four-year agreement. So we have to go ahead with that. That’ll be the base for the restructuring, and then we’ll be able to build on that.TE: With some of the things you’re talking about, it sounds like you’re not just dealing with the immediate situation, but ensuring that Sri Lanka has a strong foundation.RW: A strong foundation. And we won’t be around then, but we’ll become an upper-income country one day.TE: You said that the IMF agreement, which was supposed to come in August, is probably only going to be in September?RW: We&#39;ve been discussing, there are about three items that have been finalised, the team is coming, then you’re also picking up the discussions with Lazard and Clifford Chance [Sri Lanka’s financial and legal advisers]. The problem is that the disturbances of July pushed back the time for this to go ahead.TE: And then what does the timeline look like from September?RW: If we can get the board agreement, then we can get at some of the other organisations’ advance and get us some money until the tranche comes through. But more than that, it will inspire investor confidence. We speak to some other countries, too. The main issue thereafter is debt sustainability. First, we have to tackle this with the major official donors, then for the first time, you’d have to go to the London Club [of private creditors].</blockquote>

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