Sri Lanka is facing the grave risk of the rupee hitting 300 against the US dollar if the GSP+ tax concession is revoked at a time when only the tea and garment industries are able to earn foreign exchange for our country, former Prime Minister Ranil Wickremesinghe warned.
The UNP leader made these remarks in response to the Resolution adopted by the European Parliament which called for the repeal of Sri Lanka's Prevention of Terrorism Act (PTA) as the law is deemed incompatible with the conventions that the country has to implement under the Generalized Scheme of Preferences (GSP+) granted to the island nation.
In the resolution adopted on Thursday (10), the EU Parliament called on the EU Commission to consider "temporary withdrawal" of Sri Lanka's preferential access to European markets, which cuts trade tariffs significantly for Sri Lankan exports, including apparel, ceramic and rubber.
Issuing a special statement today (13), the former Prime Minister said:
"Our government took action to regain the GSP+ from the European Union to assist in developing the country's economy in 2017. This facility provides Sri Lanka with permission to export goods to Europe without taxation, which led to a boom in the garment and fishing industries.
An issue has arisen in the European Parliament this week regarding the GSP+ tax concession. We have been warned that this concession will be revoked.
Our tourism industry is at risk at this time due to the COVID-19 pandemic. With the sinking of the X-Press Pearl, issues have arisen for our fishing industry as well. The number of people going abroad for employment has decreased. Therefore, our foreign exchange has fallen.
Sri Lanka borrowed $200 million from Bangladesh due to the economic crisis caused by the decline in our foreign exchange. At present, only the tea and garment industries are able to earn foreign exchange for our country.
In such a case, we are reliant on the GSP+. If this tax relief is lost, the rupee will depreciate further and we will have to pay around 300 rupees per dollar. It will also lead to the loss of thousands of jobs.
In the face of the danger that has arisen, the GSP+ must not be politicized. The government should take immediate action to protect the concession. Do not add any more weight to the heavy economic burden that the people are carrying. I urge the government not to destroy the country," the former Prime Minister added.