Budget 2023 unrealistic and becomes a failed budget amidst ever-shrinking economy – Eran

December, 8, 2022

Mr. Eran Wickramaratne, commencing the Parliamentary debate on the budget heading of the Ministry of Finance Thursday questioned as how to increase the state revenue by 61% as stated in the budget proposals presented by the President and Finance Minister Mr. Ranil Wickramasinghe, while the country's economy continues to shrink.

Mr. Wickramaratne, who started the debate by presenting the traditional proposal to cut Rs 10 from the expenditure allocated to the Ministry of Finance, said that the budget proposed to increase the state revenue by 61% to Rs 3.4 Trillion and the government expenditure by 31% in 2023. Most of the targets are set to be achieved in 2025 instead of 2023. Saving of Primary balance is to be 2 % in 2025.

“This budget is neither realistic nor fair, the targets here are illusory, so the 2023 budget is sure to be a failed budget. Education and health have only been increased by 15% and 30% respectively. But the inflation has increased by 60%. Accordingly, there is no real increase in allocation for health and education. From that point of view, this budget is unfair and a failing budget. The country cannot be built by appointing more ministers in days to come. Is this budget for the future of the country?" Mr. Eran Wickramaratne asked.

Throughout the month of debate on the budget, the government made the 2023 budget like a palace in the sky. It is a problem how the learned officials of the Ministry of Finance put such a budget before this House. I think that this budget has been presented with ulterior political motives to protect the selfishness.

The MP said that he would ask the International Monetary Fund to give the country targets and goal which could be achieved by the government, otherwise this agreement will also suffer as what befell on the previous agreements that Sri Lanka had with IMF.

So far Sri Lanka has had 16 agreements with IMF and nine of them were completed and other seven were haphazardly given up. He mentioned that the way this government acts demonstrates even before it is signed.that the future agreement under this government will not be completed.We should agree with the International MonetaryFund only for the proposals which we can do. By agreeing to impossible proposals, the country is likely to be pushed further into the abyss.

The Treasury officials informed the Parliament that 15.9 billion rupees were lost by reducing the sugar tax from 50 rupees to 25 cents as soon as this government came to power. Until today, the government has lost 57 billion rupees due to this favoured sugar tax policy.

When tobacco taxes were increased after year 2000, the majority of the profits went to the company not to the state coffer. Therefore, introduce a price formula for tobacco as well so that most of the increased taxes will go to the treasury. When a price formula was introduced four years ago, the leaders of the present government then asked whether a government was needed if there was a need for a price formula. Now they follow the price formula. The withholding tax that was removed by the present govt, has now been set at 5% again and the revenue expected from it is Rs 90 billion. This shows the lack of consistency in the policy of the government.

Mr. Wickramaratne also mentioned about rationalization of state expenses and said that national security expenses, salaries for public employee and retirees and running of state owned enterprises are expensive and there is a possibility to reduce something like the national security expenses.

The budget allocation proves that this government does not have a clear policy on the expenditure to decide whether the country's need is for human resources or infrastructure development. More money should be spent on health and education and it is necessary for the government to take measures to protect the poor people as well. The failure of the government to increase allocations for important sectors without cutting unnecessary expenses cannot prevent the country from falling further into the abyss.

Mr Eran Wickramaratne emphasized that if 80 billion rupees could not be reduced from the upcoming budget expenditure, the agreement with the International Monetary Fund will not be successful and the government has no other option but to make excuses for its inability in the next budget.