Second Reading of Interim Budget 2022 passed in parliament

The Second Reading of the Appropriation (Amendment) Bill for the remainder of the fiscal year 2022 was passed in Parliament with amendments today (Sep 02) by a majority of 115 votes.

Announcing the results of the division which followed the conclusion of the debate on the Second Reading of the Interim Budget 2022, the Speaker said that 120 lawmakers had voted in favour while 05 voted against.

Meanwhile, 43 MPs abstained from voting.

The vote on the Second Reading was sought by NPP MP Anura Kumara Dissanayake.

UPDATE: Following the conclusion of the vote on the Second Reading of the Appropriation (Amendment) Bill to amend the Appropriation Act No. 30 of 2021, the Third Reading was passed with amendments and without a vote in the parliament.

The Appropriation Bill presented by the former Minister Basil Rajapaksa, who was the Minister of Finance at the time, was previously passed in parliament following a debate held on the Bill for the purpose of providing necessary service expenses and arrangements for the fiscal year 2022.

Thereby, the Appropriation Bill was endorsed and certified as an Act on December 10, 2021, and was herein called the Appropriation Act No. 30 of 2021.

After Ranil Wickremesinghe assumed the office of the President, the parliament was prorogued on July 28, 2022, and the third session of the Ninth Parliament was declared open on August 03, 2022. While presenting his government’s policy statement, President Wickremesinghe stated that he would soon present a new budget.

As a result, this Appropriation Bill for the remainder of the 2022 fiscal year as a new government is presented to parliament as an amendment to the previously presented Appropriation Bill.

Prime Minister Dinesh Gunawardena, on behalf of the Minister of Finance, presented the Appropriation (Amendment) Bill to amend the Appropriation Act No. 30 of 2021 to the Parliament for the first reading on August 09, 2022.

On August 30, 2022, President Wickremesinghe, in his capacity as the Minister of Finance, Economic Stabilization and National Policies, delivered the interim budget speech or the second reading of the Appropriation (Amendment) Bill when the parliament convened at 1.00 p.m.

“Our effort is to stabilize the economic growth rate. Our aspiration is to establish a solid economic foundation by the year 2026,” he said, in his final remarks during the speech. 

President Wickremesinghe said as at the end of 2021, Sri Lanka’s public debt is about 110% of the Gross Domestic Product (GDP). “Our target is to bring this down to less than 100% in the medium term.”

“If we build the nation and its populace based on the National Economic Policy, we would be able to become a fully developed country by the year 2048, when we celebrate the 100th anniversary of independence.”

Key proposals made in interim budget speech:

• Increasing government revenue to around 15% of GDP by 2025 from the 8.2% of GDP as at the end of 2021

• A primary surplus of more than 2% of GDP in 2025 and to improve upon this level thereafter.

• Reducing public sector debt from around 110% of GDP by the end of 2021, to no more than 100% of GDP in the medium term

• Increasing Value-Added Tax (VAT) from 12% to 15% effective from September 01

• Introducing compulsory tax registration for all residents aged above 18 years, without considering their annual income and tax-free thresholds

• Taking actions to attract foreign investors and/or technology holders to establish joint ventures with SriLankan partners for industrial investments with advanced technologies to ensure better utilization of mineral resources and increasing value addition without jeopardizing the interests of the national economy and the sustainable use of resources

• Introducing required laws to establish a system such as Inspector General (IG) in the USA, tasked with making sure government expenditure system is working well and in the way it is intended

• Rationalizing the number of government employees

• Reducing the retirement age of public sector and semi-governmental employees to 60 years

• Suspending the purchase of fossil fuel-powered vehicles for the public sector and promoting the use of electric vehicles in the future 

• Having a review on Sri Lanka’s defence strategy called “National Security - 2030”

• Establishing “State-Owned Enterprise Restructuring Unit” to facilitate restructuring of government-owned business entities and allocating Rs. 200 million to implement this proposal

• Introducing new legislation under a Public Finance Management Act (PFM Act) that will include stronger fiscal rules

• Establishing “Parliamentary Committee on Ways and Means” to closely deal with issues and making proposals for raising government revenue

• Setting up an independent National Debt Management Agency (NDMA) under the General Treasury to  pay special attention to the management of public debt

• Establishing National Agency for Public Private Partnership (NAPPP) to identify and facilitate investment to be undertaken in partnership with the public and private sectors

• Implementing new Central Bank Act as a key legislation to strengthen the monetary sector in the country

• Allocating 20% shareholders in state banks to the depositors and staff of those banks

• Slashing capital expenditure and finding room to provide enhanced support for vulnerable communities

• Providing additional monthly allowance of Rs. 2,500 to pregnant women in addition to Rs. 20,000 already provided to them

• Providing Rs. 10,000 to each family facing food insecurity for a period of four months 

• Making appropriate revisions and introducing new laws to make reforms expeditiously in a short period of time

• Waiving off the cultivation loans amounting to Rs. 688 million (excluding interest) obtained from state banks as of May 31, 2022 by paddy farmers with 2 hectares or less who are in repayment arrears

• Introducing a “National Food Security Programme” covering broad loans including the enhancement of production, collection, storage, and distribution of food, as well the provision of food to those who do not have the capacity, to ensure food security and implement the same as a national priority.

• Organizing special programmes with the support of the Tourism Board and other institutions related to the industry to attract more tourists from September this year

• Opening a branch campus of the Kotelawala Defence University(KDU) in Kurunegala