President Ranil Wickremesinghe, in his capacity as the Minister of Finance, Economic Stabilization and National Policies, presented proposed budgetary allocations for the fiscal year 2024, in parliament today (Nov.13).
He underscored the transformative nature of the 2024 budget, positioning it as a pivotal step towards shaping the country’s future and establishing a modern economic framework aligned with global trends.
The Head of State called for cooperation from all political parties, transcending partisan boundaries to collectively forge a new path for the nation through the proposed program. The budget outlines the comprehensive vision for the upcoming fiscal year, aiming to set the stage for sustained progress and prosperity.
In the 2024 Budget, themed “A Prelude to a Bright Future”, the Sri Lankan government has projected ambitious revenue and budget deficit targets.
According to Wickremesinghe, the budget deficit for the fiscal year 2024 is estimated at Rs. 2,851 billion, or 9.1 as a percentage of the GDP. This is higher than the revised 8.5% of GDP in the current year. The original target for 2023 was 7.9%.
The total expenditure for next year has been set at a record Rs. 6,978 billion, an increase of nearly 33% compared to 2023, with capital expenditure more than doubling and Rs. 450 billion reserved for bank recapitalization.
In the 78th Budget, the Sri Lankan government has allocated Rs. 5,277 billion for recurring expenditures such as subsidies and salary payments. For salaries and wages, Rs. 1,127 billion has been earmarked, and Rs. 1,158 billion for subsidies and transfers.
The Sri Lankan government has also allocated a staggering Rs. 3,000 billion to restructure foreign debt and to repay international sovereign bonds in 2024. He also proposed to raise the debt ceiling by Rs. 3,450 billion to Rs. 7,350 billion, from Rs. 3,900 billion.
The total projected revenue will be Rs. 4,107 billion (including tax revenue of Rs. 3,820 billion). The Head of State said the government’s revenue target for 2023 is Rs. 3,415 billion, however, only Rs. 2,410 billion has been collected in the days that have elapsed this year. “This represents that we have failed to generate the targeted revenue. We have to work hard to collect the targeted revenue.”
He mentioned that until foreign debt restructuring is completed, the foreign financing and loans the country can obtain are constrained. “Bank overdrafts amounting to Rs. 900 billion have been obtained in the year 2021. Currently, the total overdrafts are brought to a lower level of Rs. 70 billion. According to the new Central Bank Act, money printing is not allowed.”
Wickremesinghe warned that the country would end up again in an “economic hell” unless the government revenue is increased by 10% to 15%. “This issue cannot be resolved by simple and sweet promises, as some groups are proposing.”
Speaking further, the Head of State also emphasized that the governments should stop propagating lies for political motives.
He also underscored the importance of streamlining tax collection to make sure that high-income people do not slip through. “We have identified several critical issues in our tax system. At present the burden of taxes is placed only on a few slices of the society. Tax evasion happens due to the long-lasting weaknesses and negligence of the tax collection systems.”
Wickremesinghe said the 2024 Budget has proposed several measures to rectify these issues, highlighting that these proposals need to be implemented gradually. “We will be able to provide more tax concessions in the future when the government revenue is increased through these proposals.”
He proposed that a special penal provision be introduced to prosecute people who have not submitted tax returns and information required by the tax officials.
In addition, the ‘Tax Identification Number’ (TIN) will be made a mandatory requirement to open a current account at any bank, obtain approval for a building plan by the applicant, register a motor vehicle or renew a license by the owner, and register a land or title to a land by the buyer.
The president also underscored the necessity of unnecessary expenditure. “The public suffers due to the loss-making state-owned enterprises (SOEs). The loss of these institutions is borne by the public.” He hit out at the political groups that call them national treasures, accusing them of piling up the burden of these loss-making state-owned enterprises and pulling the whole nation backward.
Addressing the demands of salary increments, Wickremesinghe explained that this cannot be done on an ad-hoc basis, adding that 35% of government revenue is spent to public sector pay salaries. “To increase salaries, the revenue of the government also has to be increased”.
To make sure that Sri Lanka does not recede into another crisis, the president said the country’s economic and political systems must be created anew. “A new social consensus should be established. What we have done in this budget document is to lay the foundation for it.”
Budget 2024-President Ranil... by Adaderana Online
National Budget 2024 - English by Adaderana Online
