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).
In the 2024 Budget, the Sri Lankan government has projected ambitious revenue and budget deficit targets.
According to President Wickremesinghe, the budget deficit for the fiscal year 2024 is estimated at Rs. 2,851 billion, which is 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. Therefore, if we can’t increase government revenue by 10% to 15%, we will end up with an economic hell again. This issue cannot be resolved by simple and sweet promises, as some groups are proposing.”
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.”
President 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.
Sri Lankan President Ranil Wickremesinghe on Monday (13) presented the budget for the year 2024.
Here are some of the key takeaways from the 2024 Budget that was presented to parliament.
1. Public sector salaries:
The Cost of Living Allowance of Rs. 7,800 will be increased to Rs. 17,800 by Rs. 10,000 from January, 2024.
This allowance will be added to the monthly salary from the month of April. Balance accumulated from January to March 2024 will be paid in installments within a 6 month period, starting from October 2024.
2. Public Pensions:
The monthly Cost of Living Allowance of public pensioners will be increased to Rs. 6,025 by Rs. 2,500.
Budget 2024: 27 Key Highlights
Distress loan facility for all the public servants effective from January 01, 2024.
4. Small & Medium Enterprises (SMEs):
A concessionary loan scheme of around Rs. 30 billion with the support of the Asian Development Bank for SMEs to be further strengthened, encouraged and facilitated.
5. Urban Home Ownership:
Completely stop collecting rent from the low-income families who are living on rent in houses constructed under various urban development programmes.
The full ownership of these houses will be given to those families.
6. Estate Housing:
Government will take steps to grant land ownership and build houses for those living in the estate sector. Rs. 4 billion allocated for this purpose.
7. Education:
“Our country has an outdated education system. It is an education system that produces memorizers”
Several key institutions that will be established under these reforms.
These are the Higher National Council on Education, National Higher Education Commission, and the National Skills Commission.
8. Expansion of Science & Technology Education in Universities
Four new universities are to be established –
(i) Seethawaka Science and Technology University (Lalith Athulathmudali Post Graduate Institute will be incorporated to this University)
(ii) Kurunegala Technology University under the Kothalawala Defence University.
(iii) Management and Technology University
(iv) International University of Climate Change
Rules and regulations to be adopted to convert the following private higher education institutions:
(v) NSBM
(vi) Sri Lanka Institute of Information Technology (SLIIT)
(vii) Horizon Campus
(viii) Royal Institute
9. National Education University:
Establish an Education University focused on education by integrating 19 Colleges of Education.
10. New Technology University
A new Technology University will be established in Kandy under the guidance of IIT University in Chennai, India. India will fully support this endeavour.
11. State Universities:
A programme to enhance State Universities to suit the modern era will be implemented. This program will be commenced at Peradeniya University.
12. Non-State Universities:
Sri Lanka will allow any recognized educational institution in the world to establish universities in Sri Lanka once a set of powerful rules and regulations for the
regulation of non-state universities are put in place
13. English for all:
The aim of this programme is to provide English literacy to all by 2034. Government will allocate Rs. 500 million to start this ten-year programme.
14. Drug Procurement Guidelines:
“Our focus has been on issuing specific guidelines for the procurement of medicines and setting up a separate institution for that purpose. We are taking this step after conducting a detailed study of the government’s medicines procurement process.”
15. Promotions for Medical Officers:
Expedite the arrangements to adopt a promotion scheme that is applicable to both specialists and graded doctors
16. Support for the construction sector:
Government will allow construction companies to construct buildings on those lands according to the plans of the respective government agencies.
After construction, these institutions will pay a monthly rent to the construction company.
Upon recovering the construction cost and receiving corresponding dividends, the full ownership of the building will be handed over to the government agency.
17. Logistics:
Government expects to utilize Colombo Port to meet the supply needs of South West India and Trincomalee Port to meet the supply needs of South East India.
18. Jaffna Water Issue:
‘Pali Aru Water Project’ will be implemented to address the water issue in Jaffna. Rs. 250 million will be granted for the year 2024 for the preliminary activities of this programme.
19. Development of Cricket:
Rs. 1.5 billion will be allocated from the budget for the development of school cricket and for providing necessary facilities to cricket players at the provincial level.
20. Hingurakgoda International Airport:
Rs. 2 Billion will allocated in 2024 for the preliminary activities related to the construction of the Hingurakgoda International Airport
21. Central Expressway:
After external debt restructuring is complete, the second phase of the Central Expressway from Kadawatha to Mirigama will commence, jointly with China. Government to obtain support of Japan for the construction of the section from Kurunegala to Galagedara.
22. Restructuring of debt:
Rs. 3,000 Billion will be allocated for the implementation of foreign debt restructuring and settlement of International Sovereign Bonds under foreign debt restructuring.
23. Increase in the borrowing limit:
Borrowing limit to be increased from Rs. 3,900 billion to Rs. 7,350 billion. This is an increase of Rs. 3,450 billion.
24. Stabilization of financial sector:
20% of the shares of the two large state-owned banks should be given to strategic investors or the public to improve capital and support the future growth of the two state-owned banks to reduce the burden on taxpayers’ funds
25. Investments:
A new joint investment law has been drafted establishing a National Economic Commission that oversees the institutional framework that integrates the functions of the Investment Development Board, Export Development Board, Industrial Development Board, and National Enterprises Development Authority.
President proposes to establish new investment zones centered in Hambantota, Jaffna, Trincomalee, Bingiriya, and Kandy
26. Towards a Digital Economy:
Rs. 3 Billion in 2024 to establish a National Center for Artificial Intelligence to ensure an economic and social transformation, based on the latest trends in digital technology, and artificial intelligence.
27. National Research Policy for Research in Sri Lanka:
“Research and development, technological advancement and innovation, play an important role as a catalyst in promoting economic growth and supporting economic progress and social well-being. I propose to formulate a national research policy based on those facts. I propose to allocate Rs. 8 billion for this purpose.”