President and Finance Minister Ranil Wickremesinghe smiles during the presentation of 2024 Budget in Parliament yesterday.

• Hike in Cost of Living Allowance for 1.3 m public servants, 700,000 pensioners and tripling of Aswesuma expenditure among key welfare moves
• Expenditure estimated at Rs. 7 t; interest and principal debt payment account for highest at 50% or Rs. 4.8 t followed by salaries Rs. 1.1 t or 14%
• No new taxes but hike in VAT from 15% to 18% to boost income from taxes on domestic goods, services to Rs. 2.2 t or 53% of total revenue
• Budget deficit estimated at Rs. 2.85 t, up by 19% from 2023
• Borrowing limit increases by Rs. 3.45 t to Rs. 7.35 t
• President calls for new economic and political system; says 2024 Budget lays foundation
• Stresses via sustainable actions economy can be fully rejuvenated
• Says ‘let’s be honest with ourselves; let’s think about the country rather than about our politics’
• Highlights significant progress since crisis in 2022 but acknowledge deficiencies and mistakes and vows to rectify

President and Finance Minister Ranil Wickremesinghe yesterday unveiled a plethora of relief and reforms via the 2024 Budget and urged all political parties to join in to usher an economic revolution.

Relief announced, including an increase in allowance for 1.3 million public servants and 700,000 pensioners as well as two million beneficiaries of Aswesuma (cost of which is Rs. 183 billion up from Rs. 60 billion) is following admission by the President that cost of living had increased. However he said for greater prosperity the country must progress further with more reforms.

The 2024 Budget envisages an expenditure of Rs. 7 trillion and a revenue of Rs. 4 trillion resulting in a deficit of Rs. 2.85 trillion, up by 19% from the estimate of 2023. 

On the expenditure side, interest and principal debt payment accounted highest at 50% or Rs. 4.8 trillion (includes Rs. 3 trillion under external debt restructuring) followed by salaries Rs. 1.1 trillion or 14%. He also announced an increase in the borrowing limit by Rs. 3.45 trillion from Rs. 3.9 trillion to Rs. 7.35 trillion. This includes Rs. 3.4 trillion of which Rs. 450 billion for bank recapitalisation and Rs. 3 trillion under external debt restructuring.

Taxes on domestic goods and services are to rake in the biggest revenue of Rs. 2.2 trillion or 53% following the increase of VAT from 15 to 18% from January. This previously announced move was the biggest revenue effort apart from Rs. 1 trillion from taxes on income and profit.

“We were able to present a Budget that will strengthen the country’s future despite there being many problems. But in this journey, there are a number of other problems in front of us that must be faced and overcome,” President Wickremesinghe said in a two-hour presentation in Parliament.

“The economic and political system of our country 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. We can no longer become a nation dependent on others,” he said.

Wickremesinghe requested all the parties in Parliament to join the work order to rebuild the country. “If there is a better program than ours, present it to this House in detail. Let’s discuss. Let’s implement the most suitable program. Let’s inherit a proud title for our future generations,” he pointed out.

This is the moment to implement enduring and sustainable actions, stressed the President adding that to propel the economy forward, these actions must be undertaken.

“It is through these measures that we can fully rejuvenate the economy, rescuing it from the brink of collapse. This is not an easy task. But we can do it. We can overcome this challenge by embracing new concepts and following the path we have already embarked upon,” the President said.

“We should stop propagating lies for political motives. Let’s be honest with ourselves. Let’s think about the country rather than about our politics. Let’s get together to uplift the country. Let’s think about the political agendas when our country is strong,” said Wickremesinghe in presenting the Budget for 2024, which is the start of the election cycle. Some analysts viewed the bulk of the proposals as being “populist” given upcoming polls whilst others noted people deserved relief given the high cost of living.

This view wasn’t lost on President Wickremesinghe. “Some people denote this Budget as an Election Budget. The reason is the Presidential Election and the General Election is scheduled in the next year. Such a Budget is designed to provide various concessions and salary increments aiming at an election victory,” said the President during his speech adding “This is what happened during the past 75 years since independence.”

“However, this Election Budget is different. This is a budget that constructs the future of the country. This is a budget that was prepared for the victory of the county. A budget that was prepared according to Buddhist philosophy. Several proposals have been included in this budget, based on the concept of “Samajeewikathaa” concept to ensure victory for the country and the country’s future,” the President pointed out.

The President in his speech highlighted the significant progress made during the past 14 months following the worst crisis of Sri Lanka. However, being frank, Wickremesinghe said, “As we progressed along this path, there were certain mistakes. We have acknowledged this. We will humbly rectify those deficiencies and mistakes.”

“The economy which was derailed was put back on track. But this achievement alone is not satisfactory. Just by this, we would not feel great relief or comfort. Our difficult times have not ended. The entire country continues to grapple with various hardships in different aspects,” the President stressed.

He told Parliament that the Government could not correspondingly increase salaries and income to match the high cost of living which increased due to this severe crisis. The increase in prices of fuel and electricity adversely impacted all households. The increase in tax rates has also shaken up individuals and businesses, both small and large. Production costs have also escalated. We are well aware of the difficulties faced by the people of this country. “The path toward a stable and developed economy is not beautiful. It is difficult, hard and challenging. Reviving an economy in a state of bankruptcy is a formidable task. However, if we successfully navigate through this challenging period, we can create a free and decent society,” Wickremesinghe pointed out.

“If we continue to build sand castles by giving relief to the people based on political motives, the country will again be bankrupt. The success of the path that we have undertaken thus far lies on the economic reform program that we commenced. This reform program has laid the foundation to progress, steering us away from economic turmoil such as the one experienced in 2022,” the President emphasised.

A slew of measures to boost healthcare was also announced. On shelter, suspension of rents of low income families living in Government-run complexes in urban areas and grant of ownership titles as well as those in estates were announced. “About 70% of the people of this country will become owners of land and houses,” the President said.

The 2024 Budget also extended support or relief to the SMEs (concessionary loan scheme worth Rs. 30 billion).

Industry-wise, the 2024 Budget announced support to exports, tourism, construction, fisheries, dairy, IT, agriculture, shipping and logistics and public transport, gem and jewellery, handloom, etc.

With regard to reforms, education, governance, law, self-financing of municipal councils, revenue mobilisation and banking sector. Provincial/rural development, women empowerment as well as boost for culture, etc. were among other facets of the 2024 Budget.

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