Sri Lanka’s interim budget proposals at a glance

A summary of President Ranil Wickremesinghe’s interim budget speech is as follows;

  • By 2025 Government revenue is expected to grow to around 15 percent of GDP from 8.2 percent.
  • The government targeting a primary surplus of more than 2 percent of GDP in 2025 with expectations to improve further.
  • Government intends to reduce public sector debt from around 110 percent of GDP as at 2021, to no more than 100 percent of GDP in the medium term.
  • VAT rate will be increased to 15 percent from the current rate of 12 percent with effect from 1st September 2022.
  • It is proposed to establish the “State-Owned Enterprise Restructuring Unit” to facilitate restructuring of government owned business entities. Rs. 200 million has been allocated to implement this proposal.
  • A “Parliamentary Committee on Ways and Means” to be established to closely deal with issues and make proposals in raising government revenue.
  • A committee consisting of three government officials including Comptroller General of the General Treasury will be appointed to supervise and implement the entire process of the disposal of scrap.
  • A national agency will be established for the purpose of identifying and facilitating investment to be undertaken in partnership with the public and private sector. Rs. 250 million has been allocated for its implementation.
  • The new Central Bank Act will be implemented as a key legislation to strengthen the monetary sector in the country.
  • Depositors and staff of banks will be allotted 20 percent shares in state banks.
  • It was also proposed to provide additional monthly allowance of Rs. 2,500 for pregnant mothers in addition to Rs. 20,000 already provided for them.
  • There are about 61,000 food insecure families, which need urgent assistance. I will provide Rs. 10,000 per family for a period of further four months.
  • For all the above programs, Rs. 46,600 million has been allocated for a period of 4 months.
  • Rs. 133 billion has been allocated under the World Bank loan assistance for the implementation of programs with the view of reducing the impact of the current economic crisis and restoring social stability.
  • Accordingly, the monthly Samurdhi allowance has been increased to an amount ranging between Rs. 5,000 to Rs. 7,500 per month for approximately 1.7 million currently Samurdhi receiving families. Apart from that, an assistance of Rs. 5,000 was provided per month temporarily to around 726,000 families who were in the waiting list for expecting Samurdhi benefits.
  • Also, the allowance paid for the elderly, disabled, and kidney patients was increased to an amount ranging between Rs. 5,000 to Rs. 7,500. Further, the temporary assistance of Rs. 5,000 was arranged for the people who are in the waiting lists in anticipation of receiving this assistance.
  • In addition to the above concessions US dollars 110 million (Rs. 40 billion) has been allocated for the import of Urea required for paddy cultivation in the 2022/2023 “Maha” season, and fertilizer procurement is already underway.
  • Government to discuss with all stakeholders to introduce a more realistic mechanism than Termination of Employment of Workman Act (TEWA) to handle employees who lose their jobs due to the crisis.
  • Aimed at strengthening of the farmers and freeing them from debt burden, actions are being taken to write off the outstanding loan amounting to Rs. 688 million (excluding interest) which is currently in default to the state banks. Rs. 350 million has been allocated for the implementation of this proposal.
  • Youth Agriculture Companies will be established and linked with 331 Divisional Federation of Youth Clubs to get maximum results. Rs. 250 million will be allocated for this proposal.
  • There is a strong need to enhance domestic dairy production. Therefore, Rs. 200 million was allocated for this purpose.
  • Since there is a shortage of seeds and planting material it was proposed  to allocate Rs. 400 million to the Department of Agriculture to produce the necessary seeds and planting materials.
  • With the aim of efficiently and productively using government land for agriculture and livestock ,  20 acres of land will be allotted to currently unemployed youth groups (groups of about 10 members) in the area where the identified lands are located for the purpose,  and Rs. 50 million has been allocated to implement this proposal.
  • A “National Food Security Program” was proposed to be established covering broad areas, including the enhancement of production, collection, storage, and distribution of food, as well the provision of food to those who do not have the capacity, to ensure food security and implement the same as a national priority.
  • A sum of Rs. 100 million has been allocated to establish a mechanism to promote Research &Development and commercialize the same, particularly with the startup culture, with the assistance of local universities and technological institutes.
  • In order to attract more tourists from September this year, the Ministry of Tourism should organize special programs with the support of the Tourist Board and other institutions related to the tourism industry. By the end of 2023, the number of tourist arrivals per year should be increased to more than 2.5 million as the target.
  • Ministry in charge of environment should prepare a suitable program and obtain necessary support from the Climate Fund and implement a mitigation program accordingly
  • Sri Lanka needs to encourage private investment to provide educational opportunities to foreign students focusing on Science, Technology, Engineering and Mathematics (STEM), finance, information technology and medicine.  Scholarships will also be provided to Sri Lankan students to study in these universities.
  • Proposals were also made to facilitate the opening of a branch campus of the Kotalawala Defence University (KDU) in Kurunegala.
  • In order to provide more training and qualification  to the  Sri Lankan labor market, training will be provided to train and provide NVQ certificates from the selected vocational training institutes (Youth Corps, VTA, NAITA,) and TVEC, which is the regulatory body in the vocational training sector. Rs. 200 million has been allocated for the implementation of this proposal.
  • Many people in the community living in urban and rural areas are engaged in micro-scale self-employment / livelihood occupations. A community unit will be established in every Vocational Training Center providing training in food and beverage preparation, fish drying and vegetable dehydrating, sewing knitting, beeralu weaving, brass industry and Black Smithing as livelihood around the training center, online self-employments based on the Gig economy and other life occupations. Rs. 200 million has been allocated to implement this proposal.
  • The transport of 21 goods, including vegetables, fruits, flowers and tea products from the upland areas to Colombo and urban areas by railway has been initiated from Hali Ela  to Colombo Fort. Cargo Rs. 200 million has been allocated to implement this proposal. It is also expected to develop the Kelaniweli train service as a pilot project. The selection of investor/s will be based on competitive bidding process.
  • The Government will facilitate the expansion of renewable energy sources to enhance availability and reduce the cost of energy generation in Sri Lanka by allocation of necessary land and through the necessary operational restructuring of the CEB.
  • It was also proposed  to establish an “Office for Overseas Sri Lankans”, which will act as a central point of coordination to obtain the support of Sri Lankans who are living abroad and an “Overseas Sri Lankan’s Fund” will also be established to obtain the support of all Sinhala, Tamil, Muslim, Burgher and other Sri Lankans who live abroad.
  • Manufacturing of electric bicycles should be encouraged as a local industry with a view to reducing fossil fuel consumption.
  • Therefore, tax concessions will be provided for imported accessories/parts required in the manufacture of electric bicycles locally with more than 50 percent value addition.
  • Further, it was proposed to promote technology infused systems to eliminate grounds for corruption and create transparency.

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