2024 Budget’s success ‘inherently tied’ to timely execution – Ceylon Chamber

The Ceylon Chamber of Commerce has deemed the 2024 Budget as a crucial step in continuing the macroeconomic stabilization measures that began in late 2022, as a response to the economic challenges faced by Sri Lanka.

Issuing a release in this regard on Tuesday (14 Nov.), the Chamber stated that the 2024 Budget takes a “resolute approach” to address the severe macroeconomic mismanagement in the country, identified as one of the main challenges faced by Sri Lanka’s economy.  

Speaking further on the 2024 Budget, the Chamber stated that the enforcement of fiscal forbearance in monetary policy through the Central Bank of Sri Lanka (CBSL) Act, and the strengthening of fiscal rules via the Public Finance Management (PFM) Bill are “foundational for re-establishing effective macroeconomic management”.

“The Budget 2024 emphasizes fiscal discipline and adherence to the International Monetary Fund (IMF) Extended Fund Facility (EFF) program targets, recognizing these as pivotal for achieving macroeconomic stability. It sets ambitious but broadly realizable revenue targets, essential for the economic recovery and securing the second tranche disbursement from the IMF. The introduction of practical measures such as requiring a Tax Identification Number (TIN) for opening bank accounts, building plan approvals, vehicle registration, and land purchases increase the number of tax files and thus broadening the tax base are steps towards enhancing tax revenue efficiency”, the statement issued by the Chamber read.

Further acknowledging that several of the Chamber’s recommendations were included in the 2024 Budget, particularly in tax administration, trade facilitation, digitalization, climate finance, and public sector reform, the Ceylon Chamber of Commerce noted that the expedited implementation of these reforms including fast tracking the digital ID process holds immense potential to play an integral role in reshaping economic revival, enhancing tax revenues, and accelerating development. 

Other trade related reforms such as phasing out non-tariff barriers in trade, expediting the National Single Window included in the 2024 Budget were also identified as crucial elements for stimulating investment, trade, and growth. 

“The budget’s focus on factor market reforms, modernizing land and labor legislation, aligns with the Chamber’s view that economic growth is fostered through comprehensive reforms. The introduction of a separate revenue authority and the emphasis on increased private sector participation are strategic initiatives to enhance revenue collection and stimulate economic growth.

Furthermore, the budget’s focus on debt restructuring is crucial, as it plays a pivotal role in rebuilding investor confidence, which in turn is key to attracting foreign direct investment (FDI). This inflow of FDI is essential for catalysing economic growth. Additionally, the budget introduces specific sector-focused measures aimed at stimulating development and enhancing the competitiveness of key industries. 

These measures include releasing land for agricultural use, facilitating the establishment of private universities, and implementing reforms in the tourism sector. The modernization and rapid implementation of these initiatives, along with ongoing reforms in state-owned enterprises (SOEs) and the banking sector, are imperative for realizing the full potential of economic growth”.

Thus, while deeming the 2024 Budget as a significant step towards correcting past economic mismanagement and laying a foundation for sustainable growth, with  a promising framework in this regard, the Ceylon Chamber of Commerce stressed that the success of the Budget  “is inherently tied to the rigour and efficiency of its implementation”.