Ceylon Chamber says Budget in right direction but stresses implementation is key to success

• Welcomes reforms as compared to unsustainable relief measures seen in past budgets
• Cautions lack of implementation of proposals in successive national budgets has reduced the credibility of the national budget process and limited reform process only to the speech
• Opines Budget for 2023 falls short in outlining specific and concrete measures to curtail discretionary recurrent expenditure and provide greater accountability for Govt. spending

Country’s premier private sector lobby the Ceylon Chamber of Commerce yesterday said that the National Budget for 2023 presented by President and Finance Minister Ranil Wickremesinghe contains many laudable reform proposals which, if implemented in a timely manner, will complement the on-going fiscal reforms outlined.

The Chamber in a statement said it is refreshing to see that the direction of the Budget is towards reforms as compared to unsustainable relief measures seen in past Budgets. 

However, the Budget for 2023 falls short in outlining specific and concrete measures to curtail discretionary recurrent expenditure and provide greater accountability for Government spending, which the Chamber has highlighted in its recent statement in response to the proposed tax hikes. The reduction in allocation towards discretionary expenditure could have also facilitated a greater allocation towards social protection programs.

The lack of implementation of Budget proposals in successive national Budgets has reduced the credibility of the national Budget process and limited the reform process only to the speech. The implementation of National Budget 2023 with set timelines and goals will provide credibility to the Budget process as well as the success of reforms. 

“We hope the proposed Presidential Task Force established to monitor the implementation of Budget proposals will be proactive in sharing updates on a timely basis with the public providing accountability and transparency,” the Chamber said. 

It acknowledged that the Budget aims to address many of the issues faced by entrepreneurs and investors related to land, labour, productivity and tariffs. “We welcome the plans to establish several new economic zones to attract foreign investment and suggest that infrastructure development and management of these zones are entrusted to the private sector under a PPP framework. Leasing out unutilised and unproductive land belonging to JEDB, SLSPC and LRC to grow exportable crops is also a positive move to release more land for economic activities that can boost forex inflows,” the Chamber said. 

It pointed out that there is a significant focus on tax administration in line with the Chamber’s pre-Budget proposals such as the appointment of a Tax Ombudsman and introducing a Charter covering rights and obligations of taxpayers. 

“We feel the output from the proposed Presidential Taxation Commission as recommended by the Chamber will assist in avoiding ad-hoc changes in taxation as seen in the last few years. Proposals on rationalising the tariff structure including the phasing out of para tariffs will also be key in driving trade and investment,” the Chamber said.

The reiteration of the commitment made in the interim Budget to introduce a new, updated and unified labour law balancing the interests of both employers and employees is noteworthy. We also welcome the proposals to establish an unemployment insurance scheme and a health insurance scheme for private sector employees through the Employees Trust Fund. Reintroduction of paying wards in Government hospitals is also a step in the right direction.

The Chamber pointed out that the proposed growth of 64% in Government revenue will require economic activity to rebound and complement the improvement in tax administration and higher tax rates. “As such, proposals with a view of enabling growth to reach a sustainable path and improving capital formation would have been desirable in the Budget.”

As the premier body representing the private sector, the Ceylon Chamber of Commerce said it stands ready to assist the Government in driving a progressive reform agenda and engaging with the proposed Taskforce for implementation of the Budget. 

We hope that many of the reforms outlined in the Budget will move forward the discussions with the IMF and creditors as well as driving economic growth and development trajectory of the country.