Ranil presents Budget aimed at aiding economic recovery in Sri Lanka 

Ranil presents Budget aimed at aiding economic recovery in Sri Lanka 

Sri Lankan President Ranil Wickremesinghe on Monday unveiled the country’s Budget for the fiscal year of 2024, outlining a significant increase in expenditure while setting ambitious revenue targets as he attempts to steer the island nation out of last year’s debilitating economic crisis.

Terming the task of economic revival following bankruptcy a “formidable” one, Mr. Wickremesinghe, who is also the Finance Minister, told Parliament: “Our country’s situation is now better than what it was a year ago. I am not saying that the economy has recovered completely. It has become comparatively better.”

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The largest component of government expenditure, Mr. Wickremesinghe said, went towards three areas — public sector salaries, pensions and public welfare, and payment of interest on the government’s debt. According to figures published in the Budget document, the highest expenditure among those will be incurred on servicing the country’s debt and paying the interest. On the other hand, while Mr. Wickremesinghe acknowledged the government had “failed to generate” the targeted revenue of LKR 2.8 trillion for 2023, his Budget set an even higher target of LKR 4.1 trillion for 2024.

Commenting on the proposals, Umesh Moramudali, an economist at the University of Colombo, said that although the Budget was largely focused on continuing the exercise of “stabilising” the economy, with revenue-based consolidation, it included “politically popular” expenditure proposals such as the promised hike for public sector workers. “The government says they want to make cash transfers to 2 million people, but 183 billion rupees [LKR] does not seem sufficient for that,” he contended, adding that the Budget’s effectiveness depended on “political will” to implement reforms.

The Feminist Collective for Economic Justice, an island-wide group of researchers and activists studying the impact of the crisis on women and the working people, said that its concerns over the government’s social security programme excluding many of the poor, remain. Further, the Budget does not offer any substantive policy intervention or budgetary allocation to address challenges such as increasing malnutrition among children or food insecurity, while many Sri Lankans, especially children, continue to survive on just one meal a day, observed Niyanthini Kadirgamar, a member of the Collective.  

“On the expenditure side, we see a considerable chunk of the Budget going towards the repayment of interest on the government’s loans. As for revenue, the government appears to have high expectations, mainly by collecting indirect taxes. But that would only further increase the burden on the poor,” she said.