By: Staff Writer
Colombo (LNW): President and Finance Minister Ranil Wickremesinghe yesterday unveiled an abundance of relief and reforms via the 2024 Budget and urged all political parties to join in to usher in an economic revolution.
Finance Ministry officials had a hard time in the preparation of the budget while bargaining with the IMF to secure space for some relief measures for people including public servants as they need to proceed with austerity measures.
Further a pay hike will exacerbate the revenue crisis of the government but it has opted for it.
People, across a wide cross section of society, go through difficulties given the soaring prices of essential items. It is a natural phenomenon for them to expect relief in the budget as a result.
Making opposition critics views on public sector salary hike may compel the government to print money the finance ministry has devised a mechanism for salary increases of public sector employees making Budget 2024 proposals to improve revenue mobilisation critical to Sri Lanka’s return to macroeconomic stability.
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.
The salary allowance of Rs. 10,000 in addition to the present cost of living allowance will cost the government a very high amount of over Rs 13 billion per month and Rs156 billion per year. state finance minister Ranjith Siyambalapitiya said.
The basic fiscal theory in this respect is to increase public and private sector salaries to the level of maintaining the stability of the rupee within the limit of private credit growth, he explained.
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
The government presented budget 2024 in Parliament on November 13 with wider social welfare package for the 6.8 million poverty stricken people amidst heavy increase in public expenditure, state minister of finance divulged
Sri Lanka’s welfare allocation for 2024 will have to be Rs 200 billion compared to the previous budget’s Rs. 65 billion s, he said.