* Tax revenue to be raised by 47.1% in 2024

* Rs 10,000 increase for public sector workers

* Pensioners to get Rs 2,500 allowance

* Rs. 450 bn reserved for bank recapitalization

* Four new universities to be established

* 20% of state banks to be given off

by Saman Indrajith

President Ranil Wickremesinghe, presenting Budget 2024, yesterday, in his capacity as Minister of Finance, said the state tax revenue would be raised by 47.1 percent to Rs. 3,820 billion from this year’s estimated Rs 2,596 billion.

Most of the tax revenue is expected to be generated from taxes on goods and services, according to the Budget document. The income tax revenue is to be increased by 25 percent to Rs. 1,080 billion from this year’s estimated Rs. 864 billion.

“This is a Budget to build the foundation of Sri Lanka’s recovery. We cannot continue as a people who depends on others,” President Wickremesinghe said.

“To ensure that Sri Lanka does not collapse again we have to renew and recreate our economic and political systems.”

The government seeks to increase tax revenue from goods and services by 62.4 percent to Rs. 2,235 billion from this year’s estimated Rs. 1,376 billion.

The President promised the public sector workers a 10,000-rupee increase in the cost of living allowance.

To give higher salaries more taxes have to be raised, since money printing and more borrowings could no longer be done, he said.

As a result, the enhanced payments will be given from April as tax revenues come in.

The arrears will be settled from October in six monthly installments, President Wickremesinghe said.

The cost of living allowance of state pensioners will also be raised by Rs. 2,500.

President Wickremesinghe announced the government plans to sell 20 percent stake in state banks to strategic investors or the public.

“I propose that 20 percent 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,” he said.

Separately Rs. 450 billion would be spent on recapitalizing banks, he said.

“The government is keen to ensure that all prudent measures are taken for long-term banking stability,” he said.

“To this end for systemically important banks, an independent asset quality review supported by the IMF programme was conducted. The preliminary results of this asset quality review indicate the need to build additional capital accumulation on a prudent basis. Accordingly, I propose to allocate Rs. 450 billion to support the capital improvement process in the banking system.”

The President proposed the removal of several non-tariff import taxes. “As a primary step to improve Sri Lanka’s deeper connectivity with foreign trade and global markets, we are taking steps to eliminate non-tariff import taxes, including import CESS, Port, and Airport Levy,” President Wickremesinghe said adding, “Easing of these taxes will be phased out through three to five years”.

The international market should be expanded for exports, he said. “We have to create a competitive economy. For this, we are working to establish extended trade agreements with our main partners in the region.” It was also stated that steps have been taken to establish four new universities considering the current trends for the technical sector. Accordingly, steps have been taken to establish Seethawaka Science and Technology University (Lalith Athulathmudali Post Graduate Institute will be incorporated into this University), Kurunegala Technology University under the Kotelawala Defence University, Management and Technology University, International University of Climate Change.

The President arrived at the Parliament premises at around 11.30 am to deliver the budget speech. Thereafter, the President presented the budget speech for the year 2024 at around 12 noon. This was presented as the 78th budget speech of an independent Sri Lanka.

Following the presentation of the budget speech, the President, the Prime Minister and the Ministers and diplomats joined for lunch held in the Members dining room.

According to the Appropriation Act of 2024, the total government expenditure is approximately Rs. 7,833 billion out of which Rs. 3,861 billion have been allocated.

From today (14) to the 21st, the debate on the Second Reading of the Appropriation Bill (Budget) will be held on all seven days, excluding Sundays. Moreover, the Second Reading of the Budget is scheduled to be held on Tuesday, November 21st at 6:00 pm.

Thereafter, the Committee Stage Debate will be held for 19 days, starting from Wednesday, November 22nd, to Wednesday, December 13th, excluding Sundays. Accordingly, the Third Reading of the Budget for the financial year 2024 is scheduled to be held on Wednesday, December 13th, at 6:00 pm.

During the Budget debate period, time is allotted for five Oral Questions, from 9.30 am to 10.00 am, every day. Thereafter the debate is scheduled to be held from 10.00 am to 6.00 pm and the Motion at the Adjournment Time will be held from 6.00 pm to 6.30 pm every other day, except for the days voting has been scheduled.

Budget highlights

New economic and political system 

The President said in order not to fall back into a crisis, the economic and political system of Sri Lanka must be created anew.  He said that a new social consensus should be established and that this Budget document has been presented to lay the foundation for it.

“We can no longer become a nation dependent on others. I request all the parties of this House to join the work order to rebuild the country. If there is a better programme than ours, present it to this House in detail. Let’s discuss. Let’s implement the most suitable programme. Let’s inherit a proud title for our future generations,” the President said.

Gig economy and e-commerce transactions 

The President proposed introducing a simple policy and regulatory framework to facilitate the gig economy and e-commerce transactions. He said this will also include cross-border transactions, covering payment systems, fiscal revenue, and employee welfare.

Tax Identification Number

The President says Tax Identification Number will be made a mandatory requirement to  (a) Open bank current account at any bank; (b) Obtain approval for a building plan, by the applicant (c) Register a motor vehicle or renew license, by the owner and to (d) Register a land or title to a land, by the buyer

One billion rupees for new law for tourism sector

President Ranil Wickremesinghe said that one billion rupees will be allocated for the adoption of a new law regarding the tourism sector. He further said Rs. 750 million will be allocated for the development of Provincial Tourism Boards.

Three billion rupees to set up a National Centre for Artificial Intelligence

The President said that Rs. 3 Billion will be allocated to establish a National Centre for Artificial Intelligence to ensure an economic and social transformation, based on the latest trends in digital technology, and artificial intelligence.

New investment zones

The President proposed to establish new investment zones centered in Hambantota, Jaffna, Trincomalee, Bingiriya, and Kandy.

New laws to support development

President Wickremesinghe said 60 new laws are to be introduced while other laws will be amended to support the progress of the country.

Budget allocations to settle existing debts

The President said that Budget allocations are necessary to settle existing debt, and the borrowing limit needs to be increased. He proposed to raise the borrowing limit from Rs. 3,900 billion to Rs. 6,250 billion, an increase of Rs. 3,350 billion.

20% of state banks to be sold

The President proposed that 20 percent 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.

Public debt percentage to be reduced

The President said under the debt restructuring supported by the International Monetary Fund (IMF), Sri Lanka’s public debt as a percentage of GDP is expected to be reduced from 128% in 2022 to 95% in 2032.

Rs 55 billion to complete projects halted due to economic crisis

An additional allocation of Rs. 55 billion will be directed towards completing projects that were temporarily halted due to the economic crisis.

Station plazas at Pettah, Galle, Matara, Anuradhapura and Jaffna

The President said the government is to call for proposals from local and foreign investors to establish Station Plaza or Railway Station Towns as mixed development projects based on Public Private Partnership focusing on railway stations in metropolitan areas such as Pettah, Galle, Matara, Anuradhapura, Jaffna and tourist destinations.

Buddhist University and library for Anuradhapura

As a complementary work to the establishment of the Maha Vihara University, the President proposes the establishment of a modern international library in Anuradhapura. He said the objective of this library is to secure archaic documents from international Buddhist countries and provide facilities to scholars who want to use them for their research purposes. The President said it is expected to implement this programme within the 3-year time frame and Rs. 100 million will be allocated for the next year.  President Wickremesinghe also announced that focusing on the Buddhist civilization of Sri Lanka, he expects to establish a Sri Lankan Buddhist Museum for research activities as well as for cultural promotion activities.

He said there are such Museums in different countries related to different civilizations that are utilized for research and tourist attraction.

The President proposed that Rs. 200 million will be allocated in the next year to establish the museum, which is expected to be built in several phases. “Our ambition is to make Sri Lanka a Buddhist tourist center through these Activities,” he added.

Rs 1.5 billion to develop school cricket

Commenting on the development of cricket, the President said cricket in Sri Lanka is currently facing an institutional crisis and a shortage of talent.  He further said Rs. 1.5 billion will be allocated from this budget for the development of school cricket and for providing necessary facilities for cricket players at the provincial level. The President went on to say that schools and provinces with fewer facilities are given priority in providing this allocation.

Education reforms

The President announced that a comprehensive series of education reforms are to be introduced. He said the Sri Lanka Institute of Information Technology (SLIIT), Horizon Campus, and the Royal Institute are to be elevated to universities. The President further said the University Grants Commission and Tertiary and Vocational Education Commission will be merged to establish the National Higher Education Commission.

Colombo and Trinco ports to be developed

The President says the government expects to utilize the Colombo Port to meet the supply needs of South West India and the Trincomalee Port to meet the supply needs of South East India.

Two billion rupees to develop fisheries and agri sctors

The President says Rs. 2,500 million has been allocated to develop the fisheries and agriculture sectors, Rs. 100 million to develop medical tourism and Rs. 11,250 million for district coordinating committees to recommence the decentralized budget program.

200 electric buses for Western Province

The President announced that a pilot project of running 200 electric buses will be started jointly with the Sri Lanka Transport Board in the Western Province.

Second phase of Central expressway to commence

The President said as soon as the foreign debt restructuring process is completed, the second phase of the Central Expressway, i.e. the section from Kadawatha to Mirigama, will be started jointly with China. “We hope to get the support of Japan for the construction of the section from Kurunegala to Galagedara. We are planning to find out whether it is possible to build the highway up to Katugastota,” he revealed.

Intl Airport at Hingurakgoda

The President says although there have been discussions on various scales for some time, the construction of the Hingurakgoda International Airport has not been implemented. He further said, therefore, for its basic activities, Rs. 2 billion will be allocated for  2024.

The President noted that despite Sri Lanka experiencing a primary budget deficit of 5.7% of the GDP in 2021, there was a turnaround and the country achieved a surplus in the first half of 2023.

A separate institution for medicine procurement

Announcing plans for the Health Sector, the President assured the shortcomings will be identified and addressed. He further revealed that guidelines will be issued, and a separate institution will be established for the medicine procurement process.

National programme to enhance English literacy

President Wickremesinghe said it is necessary to develop a national programme to enhance English literacy in Sri Lanka. He said this programme aims to provide English literacy to all by 2034, adding that Rs. 500 million has been allocated to start this ten-year programme.

Four new universities

The President has announced the establishment of four new universities. They are; Seethawaka Science and Technology University, Kurunegala Technology University under the Kotelawala Defence University, Management and Technology University and international Climate Change University. The President expressed hope to triple the current number of universities over the next few years, adding that plans are underway to attract not only local but also foreign students.

Govt pensioners to get Rs 2,500 COL allowance

President Ranil Wickremesinghe said government pensioners will receive a monthly Cost of Living Allowance increment of Rs 2,500, with a total allocation of Rs 386 billion earmarked for pensions in 2024.

Four billion rupees to help estate sector workers 

The President announced Rs. 4 billion has been allocated to help citizens of the estate sector granting them land ownership and assisting housing development.

Rs 50 billion to assist SMEs

The President said that Rs. 50 billion has been allocated to assist Small and Medium Enterprises (SMEs). He said a special loan scheme will be introduced with the assistance of the Asian Development Bank to support SMEs.

Senior citizen allowance increase to Rs 3,000

The President announced that allowances for Senior citizens have been increased to Rs. 3,000, covering 530,000 citizens. He further said Rs. 205 billion has been allocated for benefit programs targeting disabled individuals, CKDU patients, and senior citizens.

The President underscored that the losses incurred by public enterprises burden the public entirely. He criticized political groups that persist in placing this burden on the people under the guise of national resources, asserting that such actions are hindering the progress of the country.

President Ranil Wickremesinghe highlighted several proposals in the current year’s budget aimed at addressing shortcomings, including long-standing issues like tax evasion.

He expressed the belief that with increased state revenues, there would be room to offer more tax concessions compared to the present scenario.

The President acknowledged the consistent borrowing from state banks to offset the losses incurred by financially struggling state entities like the Ceylon Electricity Board (CEB) and the Ceylon Petroleum Corporation (CPC).

He underscored the necessity of utilizing taxpayers’ money to safeguard the stability of banks, preventing their weakening and potential collapse.

President Ranil Wickremesinghe highlighted that the government allocates Rs. 383 billion monthly for three primary expenditures. This includes Rs. 93 billion for public sector salaries, Rs. 30 billion for  ‘Aswasuma’, medicines & pensions, and Rs. 220 billion to cover loan interest payments.

The President emphasized that unless state income is increased from 10% to 15% of the GDP, the country faces the risk of economic challenges once again.

He noted that addressing this issue goes beyond simple & appealing promises made by certain groups.

Rs 10,000 COL allowance to public sector workers

President Ranil Wickremesinghe announced a Rs 10,000 allowance for State Sector employees. He explained that the Cost of Living Allowances of State employees had been increased from Rs. 7,800 to Rs. 17,800, an increase of Rs. 10,000. The President said that the increased Rs. 10,000 will be added to the salary from April 2024 and the arrears due from January to March will be paid in instalments from October 2024 in 06 months.

The President highlighted the prevention of hyperinflation, attributing the country’s rescue to the successful reduction of the inflation rate to a single digit. He said inflation had been reduced to 1.5 by October this year. The President further said Sri Lanka has increased its foreign reserves to USD 3.5 billion.

The President said that he was against the concept of increasing salaries without the means to boost state revenue. President Pickremesinghe also stressed the need to minimize state sector expenditure, especially with State-Owned Enterprises (SOEs).

President Wickremesinghe said that Sri Lanka has thus far managed to finance the gap between state revenue and expenditure, highlighting the need to meet state revenue needs amounting to Rs. 3,415 billion. The President further said Sri Lanka has earned only Rs. 2015 billion in tax revenue in the first nine months of 2023.

President Wickremesinghe pledged his commitment to humbly identify the shortcomings encountered in the journey thus far and rectify them.