LIVE UPDATE: Interim Budget Speech 2022
August 30, 2022 01:07 pm
Highlights of President’s Interim Budget Speech 2022
President Ranil Wickremesinghe invites all political parties to join the all-party government in rebuilding a strong nation.
“All this can be achieved, only if we work together in unity with common consent. I reiterate the invitation to all the parties represented in this Parliament to join an All-Party Government, since this unprecedented situation is the responsibility of us all, and therefore need to prioritize the necessities of the country and the nation.”
He said some parties say that they will not join an All-Party Government due to action by the Government which they cannot condone. Others express a reluctance to join due to their opposition to the policies.
“In this instance, I wish to emphasize that, I am not the person who decides the actions or policies of an All-Party Government. It is not an administration of a single person or a single party, and will be established according to the consent of all stakeholders of the government.”
Therefore, he reiterated that, “if there are policies or practices which you do not condone, then you have the right and mandate to change them within an All-Party Government.”
Therefore, I request all of you in this House and all the citizens of the country, to put aside your personal political goals and unite in the context of the national cause of rebuilding the country and the nation.
“If we all come together, we will be able to uplift our Motherland, and create a nation that competes and moves forward with the ever-changing world. If we miss these opportunities, we will be marginalized globally.”
“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.”
“We can no longer be a nation dependent on loan assistance. We can also no longer be used as a tool of interference by other countries with strong economies,” he stressed.
“Our effort is to stabilize the economic growth rate. Our aspiration is to establish a solid economic foundation by the year 2026,” says the President.
He said as at end 2021, public debt is about 110 percent of the Gross Domestic Product (GDP). “Our target is to bring this down to less than 100 percent in the medium term.”
He said manufacturing of electric bicycles should be encouraged as a local industry with a view to reducing fossil fuel consumption.
“Therefore, tax concessions will be provided for imported accessories/parts required in the manufacture of electric bicycles locally with more than 50 percent value addition.”
President said he would also like to propose to establish an “Office for Overseas Sri Lankans”, which will act as a central point of coordination to obtain the support of Sri Lankans who are living abroad to the country.
He said this office will encompass various organisations of the Sri Lankans across the globe and focus mainly on attracting investments, promoting tourism and similar matters.
In order to support this, an “Overseas Sri Lankan’s Fund” will also be established. It is expected to get the support of all Sinhala, Tamil, Muslim, Burgher and other Sri Lankans who live abroad for this programme, Wickremesinghe said.
He said that since providing efficient and high-quality transport service to the people is a priority task of the government, it is expected that private sector investments will be used for the development of the railway transport service using the existing infrastructure under this program.
Accordingly, it is expected to develop the Kelaniweli train service as a pilot project. The selection of investor/s will be based on competitive bidding process, he said.
President says a five-member committee, representing various sectors, should be appointed to present a report focusing on the identification of new places of tourist attractions and the improvement of related facilities and a report 18 containing their recommendations to be presented in a month for onward actions. He proposed to allocate Rs. 300 million to implement these proposals.
In order to attract more tourists from September this year, the Ministry of Tourism should organize special programmes with the support of the Tourist Board and other institutions related to the tourism industry, he said.
Here, it is necessary to target the cultural /religious events that are unique to different races to be held in Sri Lanka in the future. Considering the importance of this industry, by the end of 2023, the number of tourist arrivals per year should be increased to more than 25 lakhs as the target, he said.
He also proposed to introduce a “National Food Security Programme” covering broad areas, 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.
Since there is a shortage of seeds and planting material due to the decrease in the cultivated area and yield in the past, the Department of Agriculture and government farms should implement an urgent programme to supply the necessary seeds and planting material to the farmers, the President said.
Accordingly, he proposed to allocate Rs. 400 million to the Department of Agriculture to produce the necessary seeds and planting materials.
He said there is a a strong need to enhance domestic dairy production. Therefore, it is prudent to implement a National Programme with the support of all stakeholders through a project that will be funded by government or a development partner, Wickremesinghe said.
“Since the productivity in the highland climate is higher, the unutilized or low productivity lands of plantations could also be utilized for this project. I propose to allocate Rs. 200 million for this initially.”
The President said it is important to develop agriculture value chains as well. For this purpose, he proposed to strengthen the Domestic Agriculture Development (DAD) Value Chain Programme.
The DAD pilot phase (DAD PP) is being implemented by CBSL with its own funds (Rs. 1 billion) and it is expected to expand the program in 2023 with the assistance of the development partners, while encouraging the production for the overseas market.
He proposed to establish Youth Agriculture Companies and link them with 331 Divisional Federation of Youth Clubs to get maximum results. Rs. 250 million will be allocated for this proposal.
The President said Chapter 11 of the US Bankruptcy Code of the United States contains provisions on how to reorganize businesses in distress due to indebtedness.
Bankruptcy alone is not a reason to close the business and there are ways to reorganize the business by restructuring the assets and liabilities and by getting rid of the indebtedness while staying alive in the business.
New laws in similar lines should be enacted for Sri Lanka as well, he said.
He said they will discuss with all stakeholders to introduce a more realistic mechanism than Termination of Employment of Workman Act (TEWA) to handle
employees who lose their jobs due to the crisis.
He said that in order to stabilize the economy and facilitate the growth process, it is proposed to make appropriate revisions and introduce new laws to make reforms expeditiously in a short period of time as given below.
(a) New Laws
i. Food Security Bill
ii. Public Asset Management Bill
iii. Economic Stabilisation Bill
iv. Offshore Economic Management Bill
v. Public Service Employment Bill
vi. Public Finance Management Bill
vii. The Recovery of Possession of the Premises Given on Lease (Special Provisions) Bill
viii. Contributory National Pension Fund Bill
ix. Agency for Overseas Sri Lankans Bill 14
(b). Revision of Laws
i. Amendments to Agrarian Development Act
ii. Amendments to Excise Ordinance
iii. Amendments to Finance Act
iv. Amendments to Foreign Exchange Act
Further, under this loan facility, domestic cooking gas was imported and distributed in the country during a short time duration to overcome the domestic gas shortage that had arisen in the country due to the current shortage of foreign exchange, the President said.
“Also, we are working to meet the domestic gas requirement without shortage in the future as well. It is intended to spend about US dollars 70 million (Rs. 25 billion) from this loan assistance for that.”
In addition to the concessions provided under this project, US dollars 110 million (Rs. 40 billion) has been allocated for the import of Urea required for paddy cultivation in the 2022/2023 “Maha” season, and fertilizer procurement is already underway, he said.
President said he believes that this will enable the paddy farmers to get a good harvest in the coming season and thus will be able to get rice at a reasonable price for the rice consumers.
He said Rs. 133 billion has been allocated under the World Bank loan assistance for the implementation of programs with the view of reducing the impact of the current economic crisis and restoring social stability.
“Accordingly, I have obtained approval through the Supplementary Estimate presented to Parliament before presenting this budget to provide immediate relief to around 3.2 million people affected by the current economic situation.”
Under this, monthly Samurdhi allowance has been increased to an amount ranging between Rs. 5,000 to Rs. 7,500 per month for approximately 1.7 million currently Samurdhi receiving families.
Apart from that, an assistance of Rs. 5,000 was provided per month temporarily to around 726,000 families who were in the waiting list for expecting Samurdhi benefits.
Also, the allowance paid for the elderly, disabled, and kidney patients was increased to an amount ranging between Rs. 5,000 to Rs. 7,500.
Further, the temporary assistance of Rs. 5,000 was arranged for the people who are in the waiting lists in anticipation of receiving this assistance.
President said the recent increase in the kerosene prices has created difficulties for the owners of small boats which are used for fishing industry and for those who in the plantation areas that has no electricity services. “I will provide a subsidy for these areas.”
He said the government spent additional amount of about Rs. 31,000 million approximately from May to July 2022 to provide an additional monthly allowance as urgent assistance to those who have affected due to loss 12 of employment, decline in agriculture output and inability to cultivate due to many reasons.
President proposed to continue this programme for further four months to reduce the pressure of the economic crisis on the affected people mentioned above.
“I am well aware of the difficulties faced by many due to the ongoing crisis. That’s why I decided to cut some of the capital expenditure and find room to provide enhanced support for vulnerable communities,” he said.
A national agency will be established for the purpose of identifying and facilitating investment to be undertaken in partnership with the public and private sector. President proposes to allocate Rs. 250 million for the implementation of this proposal.
A National Institute for Public and Private Partnership to be established to identify and promote investment opportunities for public and private partnerships. Rs. 250 million will be allocated to implement this proposal, he said.
Loans obtained by small-scale paddy farmers (less than 2 hectares) from state banks up to May 2022, and who face difficulties in settling, to be waived off excluding interest and the Treasury will make payments to the relevant banks.
He said the number of paddy farmers with 2 hectares or less who are in repayment arrears of cultivation loans given by the state banks as of 31.05.2022 due to the decrease in harvest, lack of fertilizers, agro-chemicals and inputs, abandonment of cultivation, etc., was 28,259.
Aimed at strengthening of the farmers and freeing them from debt burden, actions are being taken to write off the outstanding loan amounting to Rs. 688 million (excluding interest) which is currently in default to the state banks, he said.
The money to be writing off will be paid back to the respective banks in two years in a phased manner so as not to put added pressure on the cash flow of the General Treasury, he said.
President says he expects the price of fertilizer to reduce by the Maha season.
President says he intends to establish the Parliament Committee on Ways and Means, to closely deal with issues and make proposals in raising government revenue.
A branch of the General Sir John Kotelawala Defence University (KDU) to be established in Kurunegala.
As it is important to pay special attention to the management of public debt, an independent National Debt Management Agency (NDMA) will be set up under the General Treasury in lieu of current arrangement in this respect, he said.
As a government policy, the government will suspend the purchase of vehicles that use fossil fuel for government purposes from hereon. Only electric vehicles will be purchased hereafter to be used for government purposes.
President proposed to allow 20 percent of shareholding of state banks such as the Bank of Ceylon and People’s Bank by their depositors and staff.
Delivering the interim budget speech, President says 61,000 low-income families will be given an allowance of Rs. 10,000 per month for a period of 4 months.
Wickremesinghe proposed to provide additional monthly allowance of Rs. 2,500 for pregnant mothers in addition to Rs. 20,000 already provided for them.
The new Central Bank Act will be implemented as a key legislation to strengthen the monetary sector in the country. He said this legislation would provide the framework for effective implementation of inflation targeting and prevent monetary financing of the budget deficit - what is commonly known as money printing.
President says a new Central Bank Act will be introduced.
He proposed to introduce a mandatory requirement for all citizens above the age of 18 to register with the Inland Revenue Department
The State-Owned Enterprise Restructuring Unit will be established and Rs. 200 million will be allocates for this purpose, the President said.
He said all government and semi-government employees who have served up to the age of 60 years should retire by December 31, 2022.
Retirement age of government and semi-government employees will be reduced to 60 years, the President said.
The programme to ensure food security will be launched together with the UN and other international organisations, says the President.
“We indent to hold talks with the major creditors to Sri Lanka regarding debt restructuring,” he said.
President says that Sri Lanka’s discussions with the IMF are successful and have reached the final stages. Once the discussions are complete, the Parliament will be informed, he said.
President Wickremesinghe announced that the Value Added Tax (VAT) will be increased from 12% to 15% with effect from September 01, 2022.
“The Interim Budget is being presented today to the Parliament, in order to prepare the basic foundation for changing the economic trajectory of our country. This is basic to the formulation of a national economic policy in accordance with the new world order. Based on this foundation, the Budget for the year 2023, will initiate the process of creating a new economy. For the process of creating a new economy, I plan to present a comprehensive set of proposals in the Budget 2023,” he said, commencing his budget speech.
President Ranil Wickremesinghe begins the Interim Budget Speech 2022.
President Ranil Wickremesinghe arrives in the House to deliver the Interim Budget Speech 2022, after the Parliament sittings commenced at 01.00 p.m. today (30).
The inaugural speech of the second reading of the Appropriation (Amendment) Bill will be presented by the President and Minister of Finance, Economic Stabilization and National Policies Ranil Wickremesinghe from 01.00 p.m. to 02.00 p.m.
Subsequently, the house will be adjourned till tomorrow (31) 09.30 a.m.
Budget Speech 2022 (English) by Adaderana Online on Scribd
