ECONOMYNEXT – Sri Lanka’s parliament passed the third and final reading of the 2023 budget that has proposed higher taxes and some basic reforms to content the International Monetary Fund (IMF) and secure a $2.9 billion loan to move out of the island nation’s unprecedented economic crisis.
Analysts said the 2023 budget was different from earlier budgets because some lawmakers from the government side had strongly backed reforms unlike previous years as the past governments have always focused on people’s welfare at the expense of public debt.
The budget’s third reading after more than two weeks of debate was passed by 43 votes – 123 votes in favour and 80 against in the 225-member legislature. The second reading was passed by 37 majority votes – 121 votes for against 84.
Many of the former ruling nationalist Sri Lanka Podujana Peramuna (SLPP) backed the budget presented by President Ranil Wickremesinghe, in his capacity as the finance minister on November 14.
The budget, which is seen as reform-oriented, comes at a time when Sri Lanka is in discussion with its external creditors including China for a credit restructuring.
“After the discussions with China, we can go to the next step if we handle the economy somehow or other now with difficulty,” President Ranil Wickremesinghe told the parliament in his capacity as the finance minister.
“If we can’t show the profits in such a situation, we also suffer losses, nobody outside would aid us. The Prime Minister and I discussed this matter and we have to take decisions which are not popular for the sake of the country.”
The other countries at a time took those decisions not popular but were beneficial to their
countries. We are struggling now because we failed to take unpopulour decisions in the past.
The budget has aimed at increasing tax revenue by 69 percent to fund government spending in the crisis-hit economy, but analysts have said the 2023 budget failed to address core issues on excess spending and articulate strong policies on restructuring loss-making state owned enterprises (SOEs).
The budget is expected to lay the foundation for a strong and modern economy that creates opportunities for the island nation’s youth.
The budget has aimed at increasing tax revenue by 69 percent to 3,130 billion rupees next year from this year’s 1,852 billion rupees while bringing down the budget deficit to 7.9 percent in 2023 from this year’s revised 9.8 percent.
The high tax revenue target comes as millions of Sri Lankans face the impacts of the ongoing economic crisis – 66 percent inflation, job losses, and shrinking disposable income. (Colombo/Dec08/2022)