Budget Speech – 2022
1.0 Preface
Honorable
Speaker,
1.1 I present today the 76th Budget of the
independent Sri Lanka. This is the second budget of the government of His
Excellency the President Gotabaya Rajapaksa and my maiden budget speech as the
Minister of Finance.
Honorable
Speaker,
1.2 We are passing through perhaps the most
painful period of human civilization.
I
doubt if there
is anybody who
is unable to
comprehend this reality.
Nevertheless, we must make every effort
to conquer these challenging times.
Honorable
Speaker,
1.3 I first come to learn the concept of Challenging the Challenges for the
betterment of the public in my ancestral home in Madamulana. The Rajapakse’s
have a history of never being daunted by challenges. Mr. D.M.Rajapakse, who is
known as the “the Lion of Ruhuna”, who represented the second State Council in
1936 is known by the entire country. He is my father’s elder brother (loku thaththa).
Honorable
Speaker,
1.4 My father’s election to the State
Council in 1945 was a key political turning point for the Ruhunu Giruwaya. To
date, the land and the lives of the people of Ruhuna bears evidence of Mr.D.A.
Rajapaksa’s futuristic and visionary patriotism.
Honorable
Speaker,
1.5 The Hon. Prime Minister Mahinda Rajapakse
who is today in this House, is at the center of the Rajapakse Political legacy.
The decade from 2005 to 2015 was the most critical 10-year period of
Independent Sri Lanka.
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1.6 There are three main responsibilities
that any elected government must fulfill in any country in the world. They are,
national security, development, and social welfare. President Mahinda
Rajapaksha is the only leader who fulfilled all three of these responsibilities
during the same era. Such leaders are not frequently found on the world’s
political arena.
Honorable
Speaker,
1.7 The 2015 to 2019 period marks the next
chapter of our political journey. The continuous harassments we faced during
this period have strengthened us. Nevertheless, these painful memories are not
forgotten neither by us nor by those who fought side by side with us. It is
common to take revenge from one’s enemies after victory. However, we did not
let anyone take revenge.
Honorable
Speaker,
1.8 Unshaken and undaunted by the hateful
and the violent political environment during the time of the “Government of
good governance” we dared to create the Asia’s largest and the most successful political
movement. That is Sri Lanka Podujana Peramuna. Just 15 months after the
formation of this new party we had to face our first election. That was the
Local Government election held on 10th February 2018.
Honorable
Speaker,
1.9 We were able to gain a landslide
victory in this election having defeated strong political camps. Then it was
the time of the Presidential Election. By then we had 3 incomparable political
factors which were unavailable to any other political party in the country. The
first is the unmatched political leadership of Hon. Mahinda Rajapaksa. The
second is a well-organized Sri Lanka Podujana Peramuna. The third is that the
victorious candidate who was the overwhelming choice of the people was in our
political camp. That is His Excellency Gotabaya Rajapakse who is now the
President of the country.
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1.10 Amidst a myriad
of internal and external challenges, His Excellency the President Gotabaya
Rajapaksa marked a landslide victory in the 2019 Presidential Election. 69
lakhs voted for His Excellency Gotabaya Rajapaksa. That was a historic landmark
victory with a majority of 13 lakhs of votes.
Honorable
Speaker,
1.11 Subsequently
after 9 months, in testament to the leadership of His Excellency Gotabaya
Rajapaksa, we were able to win the 2020 Parliamentary Election with a
historically large majority. The overwhelming response of our people have
managed to shake our political opponents.
Honorable
Speaker,
2.0 This Budget is presented at a time when
the world is grappling with 5 major issues.
2.1. The
first of which is that more than ever, the social and economic
disparities have increased. Or else the rich individuals and companies continue
to be richer while the poor is becoming poorer.
2.2. The
second is the slow
progress of achieving the sustainable goals. This will be even more difficult
for developing countries, such as us.
2.3. Increased environmental catastrophes owing to increased global temperature is
the third issue. Presently most
countries, both developed and developing, are faced with various natural
disasters.
2.4. The fourth issue is that assistance from bi-lateral and multi-lateral
institutions are severely limited as was never before in the history. This is
mainly due to the developed countries also being beset with a number of
internal issues that they have given priority to resolve.
2.5. The fifth issue is the challenge of adapting to the “new normal” that
has emerged post the Corona pandemic. We are faced with the challenges that
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arises
simultaneously from lockdowns, work from home, price increases, and disruption
to global production networks.
Honorable
Speaker,
2.6 These conditions have had a varying
impact on each country. The impact is worse on countries with trade focused
economies, such as ours, compared to those economies dominated by the
manufacturing sector.
Honorable
Speaker,
2.7 The opportunity to provide such
services both domestically and externally has been curtailed resulting in a
loss of income. As a result, the loss of revenue to the country and the
Treasury has been unlike any other year before. The loss to the Treasury
according to our estimates is over Rs. 500 billion.
Honorable
Speaker,
2.8 We are living through the history’s
most challenging period in terms of people’s lives, livelihoods, sources of
income, and job security.
Honorable
Speaker,
2.9 I strongly
believe that, even amidst these challenges, we are equipped with all the
necessary strengthens to manage the economy and to overcome such challenges.
3.0 Our
Strengths
Honorable
Speaker,
I take this an opportunity to enlighten
this House about our strengths, briefly.
3.1 Bold
leadership and political stability
Our country, has
the highest democratic political stability in the region. We have an Executive
President elected by the people. Our President embodies simplicity, and is a
leader, who is honest, makes firm decisions, and is dedicated to the
eradication of corruption, fraud, and waste. He is a great
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strength to our
way forward. At the same time, we have a two-thirds majority in the Parliament.
Honorable
Speaker,
This Parliament
is led by Asia’s most mature political leader, Hon. Prime Minister Mahinda
Rajapaksa. He is a leader who has rendered an extraordinary service to this
nation.
Honorable
Speaker,
In addition, our
country has an independent judiciary and a disciplined public service. We are
proud today, than ever before of both the judiciary and the public service.
3.2 Infrastructure
at Global Standards
Honorable
Speaker,
Our
infrastructure facilities are of high standard. The quality of our Ports,
airports, telecommunications, highways, roads, and electricity supply are very
good. Also, through the 100,000 kilometer road project and the 5,000 bridges
program, the by-road network will be strengthened further and the entire
country will become a single network. Therefore, we are at the forefront of
being able to provide global standard infrastructure to local and foreign
investors.
3.3 Non-aligned,
friendly international relations
Honorable
Speaker,
We have expanded
our diplomatic relations with the bilateral and multilateral agencies as has
never been done in our history. The World Bank, the Asian Development Bank, the
European Union, the Japan International Cooperation Agency (JICA), the Kuwait
Fund, the French Development Agency, the KfD, Korean International Cooperation
Agency (KOICA) the OPEC for International Development, and all agencies aligned
with the United Nations
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are
working very closely with us. In addition, I am honoured to state that these
organizations are prepared to assist our country immediately in times of need.
3.4 A
Healthy, Intelligent Human Resource
Honorable
Speaker,
We live in a
blessed country. Our people possess multiple skills; they are healthy,
educated, intelligent, courteous, and appreciative. I am, therefore, proud to
say that our human resource is rich with qualities which are not considered in
the traditional criteria of human resource development. Therefore, we have the
strength to face any challenge. Even during the time of the Covid pandemic, we
experienced practically, the importance of having a highly sensitive human
resource. As a result, we had the opportunity to provide immediate care to all.
3.5 A
Nation that is Environmental Friendly
Honorable
Speaker,
I am
sure that there is almost no nation that loved the environment as much as we
do. There is ample evidence to that effect throughout the over 2,500 years of
written civilization. The landscape of Sri Lanka is rich in forests, wetlands,
agricultural lands, and coastal and marine eco systems.
Honorable
Speaker,
Its
distribution depends on a wide range of climate, topography, and soil types.
Our country's ecosystems rich in biodiversity, such as, rainforests and coral
reefs could be found in physically defined geographical spaces.
3.6 Vision
of a Sustainable Economy
Honorable
Speaker,
Many have
thought development and environment to be diametrically opposed. But today, we
believe that the integration of development and
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environment is
possible. At a time when the world is moving towards sustainable development,
we must also protect our heritage of rich natural resources and biodiversity
systems. I wish to inform that the overall economic development strategies of
our country are geared by optimally integrating the conflicting objectives of
environment and development. We have already announced the program to build a
green economy through the “Vistas of Prosperity and Splendour”. The budget 2022
is an extension of that same concept.
3.7 Priority
for National Security
Honorable
Speaker,
We have firmly
consolidated peace and national security in Sri Lanka. Extremism or terrorism
has no place in this country. Our country is one of the most peaceful and
stable countries in the world today. We are reaping the benefits of peace after
defeating terrorism. We are happy that we are able to build a better future for
our children. However, we are also mindful that we too have to face some of the
global threats. We consider it our paramount duty to protect our nation from
such threats and to ensure national security.
Honorable
Speaker,
Therefore, we
will not abscond our responsibility for national security which is the
foundation of freedom and prosperity. We have been able to ensure national
security in line with the aspirations of the people. There is immense public
support for this. Therefore, I am pleased to announce that we have been able to
better strengthen ethnic harmony, political and economic stability, elimination
of terrorism, and counter-extremism in the country.
3.8 Leader
in Vaccinations
Honorable
Speaker,
From
May 2020, our government took drastic measures to prevent the spread of the
Covid pandemic. To safeguard our people we even had to lockdown the country
completely.
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Travel
restrictions throughout the island had to be imposed while also enforcing localized
isolations. With the third wave, the enforcement of health regulations to
prevent the pandemic was intensified.
Honorable
Speaker,
We strengthened
the availability of Covid treatment centers and facilities throughout the
country. The vaccination program focused on immunization, especially in
high-risk areas and amongst high-risk populations. The Government worked with
various parties to expedite action to mobilize resources to respond to the
health and economic challenges posed by the pandemic. We were able to save
nearly half a million people who were infected.
Honorable
Speaker
We are a
government that walked the talk. Today we have achieved the vaccination
targets. Therefore, today we are considered the “Vaccinated Nation in Asia”. We
owe our special respect and gratitude to His Excellency the President for
leading the vaccination program.
3.9 Returning
to Work Defeating Covid
Honorable
Speaker,
We
were able to gain a distinct advantage by the early control of the Covid
pandemic. We were able to revitalize the lives of our people and revive
critical sectors of the economy, including the tourism industry. Moreover, we
believe that this gave us the strength to lead to a post-Covid economic revival
ahead of other countries in the region. A large number of people are getting
used to their usual way of life. Mobility has returned. Income generating
activities have recommenced. Normalcy has returned to the lives of our people.
This has led the entire country to turn itself into a busy workplace.
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3.10 Local
entrepreneurial strength
Honorable
Speaker,
The
work done by the medical, the defense forces, and the public servants who were
at the forefront caring for us during the pandemic, was visible. Though was not
visible, another force was there, strengthening us. That is our entrepreneurial
community. They did not retrench their work forces. They supported the delivery
of essential services to the people by maintaining the production chains in
every way possible.
Honorable
Speaker,
The
export industries fulfilled their national responsibility. This helped to
manage the trade balance. We will provide every support to our entrepreneurs to
consolidate as key stakeholders of our economy. A strong entrepreneurial
community will ensure that when required they will not hesitate to serve their
nation at critical junctures. As such, our government is determined to provide
all possible facilities to them.
Honorable
Speaker,
We
can continue to identify such hidden strengths within us. However, I am not
going to elaborate on these further.
4.0 The
Challenges before Us
Honorable
Speaker,
Unfortunately,
there are many obstacles before us impeding our journey towards development. We
believe there is nothing wrong with portraying them as challenges. I also do
not underestimate the importance of making this House aware of these
challenges. Therefore, I would like to brief on these challenges.
4.1 International
drug mafia
Honorable
Speaker,
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The
attempt to involve Sri Lanka in international drug trafficking is at the
forefront of all challenges. It is a very dangerous situation. The youth who is
to take over the leadership of our country is the main target of the drug
mafia. The entire state apparatus, including, the President, the Tri Forces,
the Police, Prisons and Rehabilitation officers are bravely fighting against
the international drug mafia. We should thank them for that. Sri Lanka has
gained international recognition for making great strides in recent times in
the fight against drug trafficking.
4.2 Fraudulent
Business Operations
Honorable
Speaker,
Another serious
issue which needs to be especially considered is the impact on the lives of the
people of this country through the fraudulent business activities of
individuals and institutions seeking illicit profits. Especially, through the
concealment of goods, creation of an artificial shortage of goods, creation of
a black market through high prices are the tragedies faced by the people of
this country from time to time. Our fight against those unjust traders has not
come to an end.
Honorable
Speaker,
At times it was
necessary to retreat strategically on behalf of the people, but I urge you to
not see it as a weakness. We undertake to take action to ensure a fair market
place; instead of monopolies a competitive market; a cooperative sector that is
on par with the private sector together with the small and medium sized
entrepreneurs through the introduction of reforms to create a sustainable
solution.
4.3 Forces
detrimental to the country
Honorable
Speaker,
Similarly,
agents of foreign powers disguised as social activists are exerting a
considerable pressure on our society to the extent that, today, such so called
activism can overthrow strong and populist governments. It is not possible for
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a government
alone to manage. Therefore, I invite all citizens of this country as
responsible citizens to be vigilant about this situation.
4.4 Common
Global Challenges
Honorable
Speaker,
We, like many
other countries in the world are faced with a number of challenges. Disruption
to food production chains, climate change, natural catastrophes, energy crises,
and fluctuations in international commodity prices over which we have no
control, have become common. These cannot be solved only through domestic
measures. These require collaborations internationally. Local and international
interventions are being looked at. We must also be a partner in these ventures.
4.5 The
Challenges of rising Cost of Living
Honorable
Speaker,
We have been for
a long time talking about the frequent fluctuations in the prices of goods and
services. Yet every government failed to provide a lasting solution. We must
honestly admit it as such. We need to question why there are such fluctuations
in prices and quantities in the market. We believe that matters, such as,
changes in consumption patterns, inadequate increase in production yield,
inability to adapt to modern technology, issues with transportation and
storage, the impact of intermediaries, and the asymmetry of information, within
the production chain have all contributed to rising commodity prices.
4.6 Obsolete
economic tools
Honorable
Speaker,
We have been
unable to achieve an adequate growth in the manufacturing sectors relative to
the population dynamics. Attempts to control market prices and supplies
utilizing traditional tools without correctly understanding these situations
will inevitably be criticized. It is my belief that traditional tools are
insufficient to control the prices of goods and services. This is why in the
recent
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past our
government faced various criticisms regarding the printing of Gazette
notifications. Similarly, some of the measures used to control prices and
supply were have created uncertainties.
Honorable
Speaker,
The government
faced a lot of criticism for failing to increase production without an adequate
encouragement being given to the producers, without correctly disseminating
information about the supply network, and making decisions without following
scientific methods. Therefore, we must at least now, stop, the groping in the
darkness.
Honorable
Speaker,
We have to
accept that the increase in prices is due to a shortage of goods, the
imposition of import restrictions, the overreliance on imports, the
depreciation of the rupee together with the failure to adequately encourage
manufacturers. Given the aforementioned, it must be understood that the
solutions available to control the behavior of the goods and services market
are both medium to long term.
4.7 Greater
emphasis on a Trading Economy
Honorable
Speaker,
At present, our
economy is tilted more towards the trading sector. For a long time now, imports
have been double of exports. This is not sustainable and it is challenging. We
will have to transform our economy into an advanced manufacturing economy. The
economy should be driven by innovations and within the broad framework
envisaged in the “Vistas of Prosperity and Splendour”.
Honorable
Speaker,
We must
establish an economy that provides micro to small and medium scale producers
and large scale producers uninterrupted access to facilities that allows them
to perform. This calls for a change in the traditional laws and regulations.
Information and communication access should be broadened. The
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entire
public service should be the facilitator of the production economic process.
The Public Service should not be an impediment to the same.
4.8 Challenges
of Earning Foreign Exchange
Honorable
Speaker,
I
believe that it was important to discuss about our foreign reserves, management
of the foreign exchange rate, and the country’s current debt position. As a
government, we acknowledge that our foreign reserves are being challenged, with
the frequent fluctuations in the Rupee, which lead to the imposition of certain
restrictions on the use of foreign exchange.
Honorable
Speaker,
Our
annual earnings from tourism amounting to almost USD 5 billion did not
materialize during the last two years. Adequate foreign direct investments have
not flowed into the country. The inflow of worker remittances have also been
somewhat limited. Many avenues of earning revenue locally have also been
affected. The gap between the export income and the import expenditure is not
simply a national challenge during the past several decades, but it is an
unsolved economic problem.
Honorable
Speaker,
Although
tourism income, worker remittances and the income from apparel and tea exports
showed an increasing trend during the decade up to 2018; apart from utilizing
such inflows to meet the import expenditures, the country has failed to take
decisive action required in a middle income country to create an export surplus
in goods and services.
4.9 Public
Debt Expansion
Honorable
Speaker,
The recurring
fiscal deficit resulted in the creation of an unbearable stock of debt. The
debt to GDP ratio exceeded 100 percent for the first time during the period
1988-89 due to the island wide insurgency and terrorist activities. The debt to
GDP ratio exceeded 100 percent again several times during the period
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1998 to 2004. It
indicates that we have borrowed over and above our gross domestic production.
Honorable
Speaker,
In 2014, when
President Mahinda Rajapaksa handed over the country to the previous government,
the total debt of the country stood at Rs. 7,487 billion. It was 72.3 percent
of the Gross Domestic Product. When the present President came to power at the
end of 2019, public debt had increased to Rs. 13,032 billion. That is how the
government of good governance had created debt.
Honorable Speaker,
As such,
interest expenditure on public debt has become the single largest expenditure
item in the budget. This is in addition, to the repayments of loans that we
have to undertake. Government borrowings from domestic savings and banks have
increased, creating limitations for the people to access credit. Interest rates
increased. Share of foreign debt reached almost 50 percent of the total debt
stock. A Rs.1 depreciation of the currency, results in the debt stock
increasing by Rs.50 billion. We must understand that one of the key challenges
is that the impact the foreign currency market, money and banking activities,
interest rates and exchange rates have on each other, resulting in creating
complexities in budget management and banking and financial sector management.
Honorable
Speaker,
We acknowledge
that public finances will be severely impacted with all sources of revenue
contracting in the face of the Covid pandemic. The government had to incur a
significant cost in curbing the Covid pandemic, while maintaining the public
services, on-time payment of public servants’ salaries and pensions, and
providing relief to families who have lost their sources of income.
Honorable
Speaker,
During this
period, we settled two international sovereign bonds amounting to USD 2
billion, reaffirming the country's debt servicing capability while
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providing
confidence to the international markets. We protected our banking system. Rs.
300 billion was provided as working capital facilities at a concessionary interest
rate to provide relief to small and medium scale industrialists. We also
provided relief through the debt moratorium on loans and leasing facilities
amounting to almost Rs.700 billion, thus protecting the private sector.
Honorable
Speaker,
I also would
like to remind this House that this government is responsible for the servicing
and the repayment of the debt raised by the previous government including the
debt raised amounting to USD 6.9 billion during only a 15-month period between
April 2018 and 15 July 2019.
4.10 Management
of Foreign Reserves
Dr. N.M.Perera,
in his 1970/71 Budget Speech has presented a deep analysis of the management of
foreign reserves in the country and has stated that no government since
independence has managed its foreign reserves with a long term view. This is
clearly presented in page 5-15 of his budget speech and I invite the attention
of this House to the same. In that he states that instead of building foreign
exchange reserves, we have used it for the importation of goods creating a
foreign reserve crisis and, thereby, seeking the support of the International
Monetary Fund (IMF). From the first IMF facility in 1961, successive
governments have resorted to short term assistance from the IMF, and our
leaders and financial sector experts have failed in introducing a sustainable
long term programme to manage our foreign reserves. The government of HE the
President Gotabaya Rajapakse, expects to create apart from a foreign exchange
reserves a number of other reserves. The first of which is the reserve of
water, food, and energy, which are created through the land, water, and the
renewable energy which are gifts of nature.
4.11 Identifying
potential for Exports
Honorable
Speaker,
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We need to
explore novel avenues of earning foreign exchange. We cannot solve this problem
only by obtaining international loans. Therefore, we must adopt a special
programme to encourage the export to earn foreign exchange.
Honorable
Speaker,
I believe we
need to focus on sectors, such as, textiles and apparel, gem and jewelry,
rubber and rubber products, as well as, value-added tea, coconut and coconut
products, fish and fish products, spices, processed food, fruit and beverages,
ornamental flowers and plants, electrical and electronics manufacturing, boat
manufacturing, and engineering products and services.
4.12 Inadequate attention on non-debt creating
avenues
Honorable
Speaker,
We expect to
expand the contribution of the services sector to compensate the trade deficit.
We expect that the expansion of the service sector will contribute to bridge
the trade deficit. We need to formulate a special mechanism to encourage
exports of services. In particular, we need to upgrade the tourism industry,
expand the IT sector, promote opportunities for business process outsourcing,
and develop port and airport related services. We have paid special attention
to these in this budget.
4.13 Supplementing Imports
Honorable
Speaker,
We are a country
with an abundance of experience over a long period of time in promoting import
substitution industries. While we have been successful in certain sectors,
there has also been failures due to incompatibilities with the government
policies. “Vistas of Prosperity and Splendour” has created a broad scope for
the production of agricultural and industrial goods that are identified as
import substitutes.
Honorable
Speaker,
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HE the President
has introduced a green economy concept in this regard and we should create a
strong import substitution industries through the manufacturing of organic
fertilizer, renewable energy, and the production of Milk, Sugar and Medicines.
As such we must focus on creating a strong mechanism to improve domestic
incomes while saving foreign currency outflows. This will divert a large amount
of money otherwise flowing abroad to local farmers, industrialists, and to
others working in those fields.
Honorable
Speaker,
This creates a
new space for employment. But at the same time we are faced with significant
challenges at the implementation levels.
4.14 Limitation to encouraging Foreign Direct
Investment
Honorable
Speaker,
We have more
than three decades of experience in attracting foreign direct investment to the
country. But it always remained a challenge. Foreign direct investments flowed
into the country as investments into free trade zones and other strategic
investments. Nevertheless, we were unable to expand it as expected. We have
been able to make some progress in foreign direct investments over the past
year and a half. Already investment projects valued around USD 1,076 million
have commenced.
Honorable
Speaker,
However, certain
factions in the society and political groups need to comprehend correctly what
an investment is, what a selling is and what procedures are to be followed in
this regard.
4.15 Common social and economic challenges
Honorable
Speaker,
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Underemployment,
unemployment, poverty, malnutrition are issues that our society has been facing
for a long time. Every government that came to power after independence, has
made various attempts to solve these issues. But the results have been far from
being satisfactory. Therefore, even today we have to take care of Samurdhi
beneficiaries. That is almost 23 percent of the population. In the year 2021 itself,
20 percent of the recurrent expenditure of the government was incurred on
social welfare. In the next few decades, we envisage challenges from the change
in the demographics of the population with the percentage of elderly population
being on the rise.
4.16 The importance
of food security
Honorable
Speaker,
Food
security is the ability to access safe, nutritious food by all citizens of the
country without any trouble. A family is food-secure only if its members are
living without starvation or without the fear of being starved. With the
emergence of the Covid pandemic, we have become more concerned about food
security than ever before. This is because there are people among us whose
vulnerability to food security is high.
The
most vulnerable include those engaged in the informal sector, those without
access to income generating sources, and communities entirely reliant on buying
and selling.
4.17 State
enterprises a burden to the economy
Honorable
Speaker,
There are
approximately 300 state owned enterprises in our country. These enterprises are
engaged in the provision of various products and services. The government has
invested over Rs. 670 billion in these state owned enterprises. In addition,
annually about Rs. 75 billion is spent to maintain these entities. Most of
these institutions do not provide returns on the investments made by the
government.
Honorable
Speaker,
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So far I have
attempted to explain, the socio-economic conditions our country is faced with
at the moment.
5.0 Policy
Synopsis
Honourable
Speaker,
5.1 I spoke of the
challenges that lie ahead of us and the strengths that we possess as a country
to overcome such challenges. It is my responsibility to inform this House
regarding the basic axioms such as principles, guidelines and laws and
regulations that are followed to aptly manage the applicable instruments in the
process of developing the country to successfully confront these challenges.
Honourable
Speaker,
5.2 When it comes to
leaders, it is said that at times the leader should be ahead of his followers,
and at some other times he should be on par with the followers, whilst at
certain other times, he should be behind the followers. Wherever the leader is,
he should work with commitment, courage and honesty with the common objective
of achieving the goals. His Excellency the President, Gotabaya Rajapaksa has
followed this tenet to his utmost ever since he was elected as the President.
Honourable
Speaker,
5.3 We consulted all
groups in society dispersed horizontally and vertically in order to obtain
proposals for the budget. We listened to opinions and proposals made by various
stakeholders through mass media and social media. We sorted the proposals as
those that can be done now, those that are difficult to be done and those that
can be implemented in the future. Accordingly, we compiled a set of common
policies. When following that set of comprehensive policies, irrespective of
certain difficulties that may arise in the short run, it is our collective duty
to understand the reality even taking one step backward, so long as the medium
term and long term objectives desirable.
Honourable
Speaker,
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I wish to remind
that the National Policy Framework “Vistas of Prosperity and Splendour” was
considered in its entirety in preparing the Budget 2022.
Honourable
Speaker,
Unproductive
high expenditures and weaknesses in expenditure controls have resulted, in
often governments not being able to properly engage in expenditure management.
As a result almost every government has increased tax rates and introduced
various taxes considering the low government revenue. Other than the government
seizing a slice of the income of tax payers, it has not resulted in any
increase of the total private and government revenue. That is why national
budgetary policies should be prepared in a way that would bring about a
structural change that would enable the increase of total revenue of the
country and thereby increase savings and investment.
5.4 Therefore, I would like to present to this august House a
series of proposals for expenditure management.
Honourable
Speaker,
5.4.1 The first one of
which is to issue quarterly warrants instead of the annual warrant which is
issued by the Minister of Finance authorizing the expenditure of government
institutions for the entire year after the passage of the annual Appropriation
Bill in Parliament. Accordingly, it is expected to instil financial discipline
in the utilisation of the allocations by requiring all government institutions
to prepare their plans relating to procurement, salaries and allowances, debt
servicing, development and maintenance well in advance. Commitment control in
accordance with the desired objectives and steering the procurement process
accordingly, are required by heads of institutions of all expenditure units.
5.4.2 My second
priority in formulating the fiscal policy is to inculcate a savings culture
amongst a majority of the country. This is to create a conducive environment
that enables all citizens - working community, high income earners and
entrepreneurs – to save as much as they can and thereby expand their investment
capacity. Instead of providing funds for recurrent
20
expenditure,
funds for capital expenditure will be made available by the government for SOE’s
to enable them to generate income by undertaking public and private
construction activities and providing other services.
5.4.3 To improve the business focus and
financial discipline of State Owned Enterprises that have become drain on the
national economy, based on contemporary benchmarks, focusing on those entities
that have been incurring losses continuously and those under-utilized, a
multi-disciplinary consultative committee will within a specific time frame
propose a strategic way forward.
5.4.4 Assets of many of these enterprises are
underutilized. I expect that my fellow Ministers, their secretaries and heads
of departments would provide leadership to utilize these assets to the maximum.
Except for office buildings that are under construction at the moment, I
propose to suspend the construction of new office premises for two years. It is
necessary to utilize the allocated capital expenditure for development
activities that directly benefit the public, while productively using the
existing office facilities. I also propose to include
amendments
to the Appropriation Bill preventing requests for Supplementary Estimates for
2022 by all Ministries.
5.4.5 I firmly believe that public sector
should also contribute in promoting
national savings. In this regard, it is also required to reduce Recurrent
Expenditure. Hence, I propose to
reduce the fuel allowance provided to Hon Ministers and government officers by
5 litres per month, cut down the telephone expenses of government institutions
by 25 percent and reduce the provisions for electricity by 10 percent in order
to encourage the shift to electricity generated through solar power.
Secretaries to Ministries and Heads of Institutions are required to take action
to deploy those concentrated in urban areas into the peripheries.
Honourable
Speaker,
5.4.6 Members of
Parliament are now entitled for a pension having served for a period of 5
years. I propose to extend the five year
period to ten years. This proposal is valid for all positions including the
Presidency for whom salaries
21
are paid from
the Consolidated Fund. Legal provisions are required to be formulated to bring
this proposal into effect.
5.4.7 The public service in our country covers
the entire economy. The efficiency of the public sector has an impact on the
efficiency of the private sector as well. We have firmly recognized the
importance of transforming the public sector into an efficient service and one
that is easily approachable by the public. All government institutions should
become courteous and client-centric. Hence, I propose to prepare a Client
Charter for every government institution. Further, it should be displayed in
the premises for the information of the public.
5.4.8 I propose to
introduce an appraisal system for the public service based on the satisfaction
of clients and Key Performing Indicators (KPI) and thereby motivate them and
enhance the efficiency and productivity of the public service to an optimal
level.
5.4.9 I reiterate that it is the
responsibility of the National Pay Commission to introduce amendments in
relation to salaries and pensions of the public service, eliminate anomalies,
and to establish salary structures. We must understand that unwanted salary
scales and irregularities within the salary structures occur when such
institutional structures are disregarded. Hence, I propose to establish a new salary structure for the public
service by removing the anomalies in public service salaries with effect from
the next financial year.
Salary
administrative procedures will be simplified by granting the salary increment
on the due date without the need of appraisal reports for all government
employees, except for those who are subject to disciplinary action.
5.4.10 I propose to establish an Integrated Results Based Management System to follow up the
achievements of anticipated progress as per the plans prepared by integrating
the national development priorities as well as priorities in areas related to
those priorities, while monitoring the progress of development objectives, aims
and targets that Sri Lanka expects to achieve within the 2022-2024 Medium Term
Budgetary Framework and to implement that system
22
through the five
(5) National Coordinating Sub-Committees currently established by consolidating
Ministries.
5.4.11 Life expectancy at birth has increased. At the same
time, the elderly population is on the increase. Sri Lanka is almost on par
with developed countries as per the quality of life indices. As a result,
elders have the capacity to remain in active service for much longer than
before. It is very important to productively utilise their experience and skill
set. Therefore, I propose to extend the retirement
age of public service to 65 years in order to strengthen the labour force.
5.4.12 I propose to modernize the Samurdhi movement considering the practical social context. Without
restricting the Samurdhi movement solely to a poor relief programme, I expect
to transform it as a rural development movement that ensures economic revival
and food security, while integrating with modern trends. I assign the
responsibility in this regard to the senior management of the movement. I
propose to select beneficiaries for social welfare and assistance programmes
under a rational and scientific mechanism.
5.4.13 It is also planned to restructure the Samurdhi
banking movement which is the nearest financial service provider that
fulfils the financial needs of the rural
community. I propose to convert Samurdhi
banks as one-stop shops that provide all services and facilities including
financial facilities and financial advice for the development of micro and
small enterprises.
5.4.14 To make the
Cooperative movement stronger, I propose to swiftly commence the
implementation of the required restructuring activities to conduct proper
investigations into alleged frauds on depositors of cooperative and rural
banks, assist such depositors by reimbursing financial damages, if such frauds
have occurred.
5.4.15 The management of all State Owned Media Institutions is entrusted with the responsibility
of substantively reviewing the business focus and financial
23
discipline of
such institutions and achieving the required results by implementing a
strategic plan within a short period time.
5.4.16 I propose to expand the business focus of the Sri Lanka Insurance Corporation to move
into sectors that has previously not been looked at ensuring a competitive
market in which everyone could to get an insurance policy, within a new
insurance system. I propose to amend relevant laws in order to amalgamate life
and property insurances of Sri Lanka Insurance Corporation.
5.4.17 It is expected to avoid deficiencies that occur or can
occur in charging custom duties by updating the HS code system currently being
used by Sri Lanka Customs, while
also introducing advanced technological tools globally used in customs operations to Sri Lanka
Customs. In addition, a Single Window System will be established to facilitate
the import-export process by integrating all institutions that work with Sri
Lanka Customs into one system. I propose to grade the exporters and provide
free customs facilities to exporters with a high grading.
1766 HS codes
are subject to regulations by the Import Controller. Importers are faced with a
number of issues as they are required t get clearances from a multitude of
agencies. At the same time, as a large number of HS codes are subject to CESS
the cost of import and export has increased. Excluding the HS codes pertaining
to liquor, cigarettes, motor vehicles and domestically produced agricultural
products, the Custom duties and CESS rates would be simplified together with
the licensing mechanism for imports, the custom clearances will be provided
once such imports have been cleared by the Standards Institution and the Quarantine
authorities.
5.4.18 I propose to strengthen the Consolidated Large Tax Payer
Unit of the Inland Revenue Department established bringing in an integrated
administration of all the units
connected to the 80 percent of the government tax revenue which is derived from
20 percent of the tax payers.
Honorable
Speaker,
24
The Revenue
Administration Management Information System (RAMIS), which was initiated by
Hon. Prime Minister Mahinda Rajapakse in 2013 and launched in July 2018 but the
full implementation has been somewhat slow due to various reasons. Arrangements
are being made to implement the system by expeditiously attending to matters
that were delayed in the recent past due to COVID-19. Integration of all banks
and financial institutions with Lanka Clear by using the online tax payment
platform should be made an element of tax administration. I also propose to
expeditiously introduce amendments to the tax law in relation to the use of
digital identification numbers and other legal requirements.
Honorable
Speaker,
Treasury records
indicate that due but uncollected tax revenue is over Rs. 200 billion. It
amounts to around 1.5 percent of the GDP. Taxpayers evade payment of due taxes
resorting to various mechanisms. Further, although tax evaders are sent a
notice of tax assessment by Inland Revenue Department, there is a belief that
the payment of due taxes can be evaded by paying a certain penalty to the
Department. In order to change these practices, I expect to establish legal
provisions to apply technological
processes to tax administration.
5.4.19 As proposed by the 2021 Budget, I propose to implement
the Special Goods and Services Tax, for which legal provisions are already
drafted, with effect from January 2022 to cover all goods and services covered
by the Act.
5.4.20 The serious lapses in the mobile and the internet signal
network were evident during the Covid-19 pandemic. I propose to install a
country wide telecommunication network expeditiously covering all 10,155
schools in the country using Fibre Optic technology, for which the required
financial and technological assistance is proposed to be provided to the
Telecommunication Regulatory Commission.
5.4.21 Although three-wheeler
service is vastly spread around the country, contributing immensely to the
service sector in particular, as of now there is no
25
mechanism to
regulate the Three wheeler service. The need for regulating the service has
arisen due to its massive expansion related issues. To that effect, I propose
to establish a Three-wheeler Regulatory
Authority and to make decisions including the three-wheeler charges and
service standardization through the Authority.
5.4.22 We have taken into account gender, racial and other
cultural differences and demographics in preparing the budgets, allocation of
funds and implementing budget proposals by Ministries,
Departments, Corporations and Statutory Bodies. I propose that monitoring
mechanisms adopted by each Ministry also
reflect these factors at its implementation level.
5.4.23 As per population projections, there is a need for a
unique social safety programme for
safeguarding the rapidly ageing population. To this effect, I propose to establish a contributory pension scheme for senior
citizens who do not currently receive pensions.
5.4.24 There is a considerable number of differently-abled persons in Sri Lanka. They should also have
access to equal opportunities, equal privileges and equal responsibilities in
the society. Therefore, in line with the Article 12 of the Constitution of the
country which spells out that all citizens are equal, I propose to introduce an
Act on Rights of the Differently-abled.
I further propose to launch a programme for the development of their
entrepreneurship and skills.
5.4.25 I propose to introduce an inclusive programme to address
the issues on children and mental health
development having identified the basic issues faced.
5.4.26 Sri Lanka should immediately move towards an economy
which is more tilted towards the production
economy, synergizing on the opportunities in the service economy. We should
create a trend where the educated young generation of our country strive to
become entrepreneurs and employment providers by changing their mentality of
pursuing job opportunities. Accordingly, it is proposed to not to charge the
business registration fees in the year 2022 in order to provide an impetus for
new start-ups.
26
5.4.27 It is proposed to amend the Finance Act to simplify the
complex processes currently in place for new business registration process
adopted by the Board of Investment, Department of Foreign Exchange and Export
Development Board and to consolidate fees levied by various institutions in
this regard.
5.4.28 I propose to take action to review issues, requirements
and deficiencies in relation to the production of fruits, vegetables, fish
based products, liquid milk and commercial crops and to expand local and
international market-oriented products in order to promote production economy.
5.4.29 While identifying the deficiencies in the sector of
growing flowers and foliage, I propose to implement a new programme to provide
necessary knowledge, to encourage flower growers and to promote export-oriented
production. I entrust the leadership of this task to the Department of National
Botanical Gardens which is under the Ministry of Tourism.
5.4.30 I propose to facilitate and encourage the private sector
to produce medicines of highest quality in Sri Lanka targeting the
international market by further promoting steps already taken with regard to
pharmaceutical production and linking with companies of international repute. I
further propose to expeditiously implement the proposals of the committee
already appointed, comprising of all stakeholders on a mechanism to keep the
pharmaceutical prices stable.
5.4.31 I propose to start
the production of the raw materials required both domestically and
internationally by the apparel industry thereby opening a new avenue of
entering the international market. At the same time, I propose to implement a
rapid programme to promote the local handloom and the Batik production industry
with the aim of generating an income of USD 1 billion by 2025.
5.4.32 I propose to further enhance the steps currently taken
to increase Sri Lanka’s share of gems and natural mineral resources in the
global market. Given the
27
capacity to
increase the income generation, it is proposed to make Sri Lanka a main centre
for the purchase of gems in the world market.
5.4.33 Our country is recognized globally as a top brand in the
production of related Rubber goods. As such, I propose to restrict the
importation of rubber related products and to promote investments in the
production of rubber-related finished products instead of exporting rubber as a
raw material.
5.4.34 Action will be taken to remove obstacles in purchasing
raw materials for the production of electrical and electronic appliances and
promote investments of the private sector to achieve targets of the
international market. So as to promote renewable energy, ensuring the reduction
of the use of carbon emitting fuel and foreign currency outflows, I propose to
encourage the local manufacture of equipment and appliances required for the
generation of renewable energy.
5.4.35 To facilitate the necessary environment for promoting
Sri Lanka as a centre for wellness tourism, required action will be taken to
link our country to the global wellness tourism industry which is estimated to
value more than USD 700 billion. Further, required action will be taken to promote
different forms of tourism such as event tourism that focuses on events such as
exhibitions and conferences, destination tourism and homestays in order to
provide the benefits of the tourism industry to the general public.
5.4.36 I propose to formulate a new programme for establishing
new Ayurveda treatment centres and promoting traditional indigenous medicine
and natural treatment methods.
5.4.37 I propose in line with the policies of sustainable
development with the objective of enhancing health and nutrition of our
citizens to expand the capacity of the organic fertilizer production of special
categories of fertilizer for targeted cultivations/crops through the provision
of the required technical expertise at Grama Niladhari Division level.
28
5.4.38 I propose to promote the diversification of agricultural
products and value added agricultural products so as to generate foreign
income.
5.4.39 I propose to establish hi-tec agro parks in order to
produce new agro-entrepreneurs by providing uncultivated lands to women and
youth under a special basis and thereby expand the extent of cultivated lands
in agriculture and plantation sectors.
5.4.40 I further propose to introduce new laws on the usage of
lands owned by plantation companies as well as those of both public and private
ownership to ensure the maximum utilization of buildings and other assets.
5.4.41 Our government is always committed to safeguarding the
farmers. But, a clear law in this regard has not been formulated yet. There
should be a national programme that protects the interest of farmers, ensures
an appropriate price for agricultural produce, enhances the productivity of
agricultural sector and manages risks in agriculture while ensuring its safety.
In this regard,
it is required to focus our attention on the conservation of soil and water
resources, management of damages to wildlife and ensuring food safety.
Strategies should be formulated to enhance the productivity through genetically
engineered agricultural produce, whilst also preventing likely damages from
such produce.
Therefore, I
propose to draft a Green Agricultural Development Act that protects the
traditional knowledge of our farmers, safeguards their right to own lands and
right to the distribution of water and ensures the participation of the farmers
in the decision making process.
5.4.42 Sri Lanka is positioned at the center of Asia. The nave
routes connecting the east Asia to west Asia lies in close proximity to Sri
Lanka. This positioning will strengthen our global economic operations. This
was identified for the first time under the Five Hubs strategy presented by “Mahinda
Chintana” policy statement in 2010.
29
As
such, I propose to make Sri Lanka Asia’s Hub.
Naval Hub
5.4.42.1 Given Sri Lanka’s position on the navel route
connecting East Asia to West Asia, the country could be developed to not only
as a hub for bunkering, provision of food and supplies but also as a point of
crew rotation. In addition the country could also undertake ship repairs.
The
Colombo Port has already become the navel hub for entrepot trading in South
Asia. Once the construction of the East and the West Terminals at the Colombo
Port is completed, entrepot trading is expected to expand. Accordingly it is
expected to develop Colombo Port as an Entrepot Hub, the Trincomalee Port as an
Industrial Port, Galle Port as a Tourist Port and the Hambanthota Port as a
Service Port.
When considering
Sri Lanka’s strategic position in the world along with already developed
infrastructure of ports, there is every opportunity to establish Sri Lanka as
an international free port. Hence, I propose to introduce necessary legal
provisions under a new Finance Act to establish free ports. Further, I propose
to simplify the strict rules currently in place with regard to registration of
ships and to facilitate and increase focus for this purpose and thereby I
propose to transform Sri Lanka which is physically located as a naval hub to be
a central as a naval hub in the global context.
Aviation Hub
5.4.42.2 Although Dubai and Singapore are considered as the
Asia’s aviation hubs, their position creates issues especially in long haul
flights. However, Sri Lanka’s position as the centre-point will make such long
haul flights becomes shorter and much more comfortable. At the same time, Sri
Lanka could also be the hub for India which has the world’s second largest
population. The shortest route to Africa, where millions of Indians live, from
India lies through Sri Lanka.
30
Currently the
second runway is being constructed at the Bandaranaike International Airport,
while also improving the infrastructure facilities for the provision of
services. While the Mattala Airport is being developed to be more attractive
for tourists as well as for cargo transportation and it is also expected to
construct a hospital and hotels in close proximity.
Energy Hub
5.4.42.3 Singapore accounts for 25 percent of the global bunkering in the
world, in spite of not having a drop of oil within its shores. Singapore
imports Crude oil and produces fuels such as Petrol, Diesel, Bunkering oil, and
Aviation fuel together with a number of by products such as Bitumen, Plastic
and Nylon for export.
Leveraging on
the strategic positioning Sri Lanka also has the potential to become Asia’s
energy hub, through the import Crude Oil and export petroleum products. The
unutilized Trincomalee Tank Farm, with a storage capacity of 8 million barrels
of oil is extremely crucial in this context.
Two new
Refineries focused on exports, are planned to be established in Hambanthota and
Trincomalee. At the same time, the potential to generate electricity from
renewable sources such as wind, ocean waves and Solar exceeds Sri Lanka’s
energy requirement. As such Sri Lanka has the opportunity to produce and export
Green hydrogen from the surplus of renewable energy.
Commercial Hub
5.4.42.4 Given Sri Lanka’s proximity to the two of the largest
markets in the world being India and China, has created an opportunity for the
country to be a trading place for their goods. In addition, the country could
also provide professional services such as Banking, Insurance, Arbitration and
legal services together with a developed securities and a financial sector
market.
Knowledge Hub
31
5.4.42.5 Two millennia ago, Maha Vihara in Anuradhapura was the
knowledge hub of Asia. For many, not only in Asia but also in Europe, who were
looking for knowledge Sri Lanka was a final destination. With the aim of
attracting foreign students, academics and researchers, we expect to develop the
infrastructure facilities and the standards of the Universities. We have a
unique opportunity to share knowledge on Buddhism, indigenous medicine,
meditation and eco-friendly lifestyle with the rest of the world.
5.4.42.6 I propose to amend laws and regulations that impede
the inflow of foreign exchange earned by young free-lancers through development
and upgrading of new software through IT knowledge and artificial intelligence
and new innovations.
There is a need
for public and private entities to improve their, businesses, products and
services in line with new technology. Therefore, digitalization is no longer an
option.
It is proposed
to use technologies such as Blockchain to strengthen internal systems by
improving the efficiency, operational efficacy, expenditure management.
Conventional
banks should transform themselves adopting technology matching the speed of
change in new technologies. Innovations are required in a fast evolving market
place. As such, it is proposed to encourage banks to convert their branches
into smart banking units using digitalization. Therefore, the Central Bank is
requested to introduce the required laws, regulatory framework including on
capital requirements, licensing etc.
To
boost a techno-entrepreneurship driven economy, the budget 2021 proposed the
establishment of techno-parks of which two are already being set up in
Kurunegala (Rathgalla) and Galle (Akmeemana) while by 2023, three new
techno-parks are proposed to commence in Habarana, Nuwaraeliya (Mahagasthota),
Kandy (Digana).
32
5.4.43 I propose to carry out an in-depth analysis and review
on the procedures followed by the Board of Investment in attracting Foreign Direct Investments (FDIs) to
Sri Lanka. I propose to expeditiously look into whether conditions currently imposed to facilitate
attraction of FDIs should be relaxed and to identify suitable methods and to
formulate a programme for this purpose.
5.4.44 I propose to submit a Special Finance Bill to ensure the
safety of local and foreign exporters, to ensure the safety of transactions of
foreign current accounts and to simplify the conditions that are imposed by the
Central Bank on exports with regard to foreign currency conversions and
transfers.
5.4.45 Our government has always been keen on reducing district
level disparities identified in education and health facilities. Private
sector, too, always contributed in this regard. In order to further enhance
these efforts, I propose to provide the required lands and tax concessions to
encourage investors to establish an international school and a hospital in
every district.
5.4.46 I propose to obtain investments through public-private
partnerships and local and international sources to implement mixed development
projects comprising of shopping malls, financial services, hotels, office
facilities, cinema halls, entertainment centres, apartments, etc. using lands,
owned by Department of Railways, that are currently not being utilized in a
productive manner.
5.4.47 I propose to decentralize the monitoring of all
infrastructure development projects of the government to continuously maintain
the commitment of the contractors on work zone management, safety of the
community and workers and environmental sensitivity and to expeditiously and
productively implement such projects.
5.4.48 To fast track the public investment programme,
maintaining efficiency, effectiveness and transparency, the Procurement
Processes will be modernised including through the introduction of a more
decentralised process and also the e procurement process. The new processes
will be benchmarked to those
33
processes
already followed by multilateral agencies such as the World Bank and the Asian
Development Bank. At the same time, to remove legal impediments to promote
investments standing Investment Committee will be set up.
5.4.49 In order to increase income from foreign remittances, I
propose to further improve the existing facilities to provide knowledge, skills
and other requirements for going overseas for employment and to enhance opportunities
available in this regard by consulting the Ambassadors of other countries.
5.4.50 Focusing on ongoing green projects and programmes for
achieving sustainable development goals, I propose to initiate discussions with
interested foreign stakeholders to obtain green bond financing facilities and
to respond to climate change through those projects. I propose to encourage
state as well as private sector banks to develop this type of financing
facilities.
5.4.51 It has been observed that the incidence of disasters
such as landslides have gone up due to the increase of natural disasters with
the global climate change. Therefore, I propose to make it mandatory to obtain
recommendations for all constructions including private houses, factories and common
amenities from relevant institutions.
5.4.52 As per the Trade Union Ordinance, No. 14 of 1935 and the
Amendment Act, No. 24 of 1970, when a government employee obtains the
membership of a professional association relevant to his service, obtaining the
membership of another government professional association is not permitted.
Further, integration, consolidation and centralization of several professional
associations of different services is also not allowed. I propose to remove
such limitations through an amendment to the Trade Union Ordinance.
6
Development of
the National Economy Honorable Speaker,
34
6.1 I view every
expenditure incurred by the government as an investment in the people. Public
interests are met by such investments. It generates assets. Those assets could
become the fixed resources with long-term benefits to the people of the
country. Or else, those assets could convert to monetary value with short-term
benefits. We refer to this as the essence of the government's financial management
program.
Honorable
Speaker,
6.2 Accordingly,
from now I will now present the Expenditure Proposals or the Investment Plan of
the Government Financial Management Program for the Fiscal Year 2022.
Honorable
Speaker,
6.3 On 07 October,
2021, we presented to this House the Appropriation Bill on Government
Expenditure. It outlines the major expenditure heads the government expects to
spend from the national budget in the coming year. This is a tradition. We must
protect it. While remaining within that tradition, we expect to further
strengthen those expenditure heads. Within these Expenditure Proposals, or the
Investment Plan, we expect to line up the development of the country through 10
key sectors.
6.4 Manufacturing economy and livelihood development Honorable
Speaker,
In 1960, Sri
Lanka's economy was better than that of Singapore and Malaysia. In 1961, the
economy of Singapore was only USD 0.76 billion. At that time, the economy of
Sri Lanka was at USD 1.44 billion.
Honorable
Speaker,
However, in
2020, Singapore's Gross Domestic Product was at USD 340 billion. Sri Lanka's
Gross Domestic Product was only USD 81 billion. This highlights the extent of
how much our economy is lagging behind.
35
As such, what we
need now is to move away from regressive policies and embark on a rapid
economic development which fulfills the aspirations of the entire population.
Honorable
Speaker,
If we use the
right economic management strategies, we can move forward similar to other
emerging economies.
Honorable
Speaker,
We expect to
strengthen the economy by facilitating the creation of new products, expansion
of existing diversification, and value addition in order to increase the
contribution to the Gross Domestic Product from the agricultural, service, and
industrial sectors.
For this, we
have considered the entire spectrum from small scale production to large scale
production. For that, it is necessary to encourage small and medium scale
enterprises through the coordination between the private and public sectors. We
have prepared a well-designed program for that.
6.4.1. Agriculture
sector
Honorable
Speaker,
More than 80
percent of our population is employed in the agricultural sector. As the
manufacturing economy develops, the agricultural sector will inevitably take
precedence. Therefore, the government has decided to invest in the agricultural
sector as has never been done before. We have identified a number of issues in
the agriculture sector which need to be addressed by the government.
Among them are;
Un-settled land
ownership Water inadequacy for crops
Lack of access to high quality seeds
36
Unnecessary
administrative laws and regulations Lack of agricultural extension services
Inadequate use of modern technology
Lack of agricultural machinery and
equipment
Damages caused
by animals and natural disasters Lack of adequate marketing facilities
Underdeveloped internal infrastructure
for rural agricultural products
Lack of adequate
and expeditious financial credit facilities for agricultural activities
6.4.2. Relief for farmers to encourage the usage of
non-toxic weedicides
Usage of
alternative weedicides and doing way with high-toxic chemicals are good
agricultural practices to adopt. Therefore, in order to promote the usage of
alternative weedicides, Rs. 4,000
million is allocated. As such, to minimize weeds and the use of weedicides
in the preparation of lands for cultivation, it is proposed to provide a Rs.
5,000 grant per hectare up to a maximum of 2 hectares.
6.4.3. Promoting
the use of organic fertilizers
The “Vistas of
Prosperity and Splendour” was formulated after a serious discussion with the
people. Accordingly, a clear people's mandate was given to guarantee their
right to a toxic-free diet. The development of a country relies upon working on
long-term goals and objectives and not on short-term solutions. Therefore, we
are committed to realize these objectives. We stand ready to support the
farming community in this regard.
As such, within
the larger organic economic framework, instead of the chemical fertilizer
subsidy from the 2021/22 Maha season, every farmer will be provided with
startup working capital to produce solid and liquid fertilizers, organic
37
pesticides
instead of chemical pesticides, and further financial support will also be
provided to support farmers to incur additional expenses to remove weeds
without using chemical weedicides. For this purpose Rs. 35,000 million is already allocated.
6.4.4. Introducing
new agricultural technology
Honorable
Speaker,
In comparison to
the developed countries in the world in terms of agriculture, we need to
rapidly modernize the agricultural sector. For the introduction of new
agro-technologies, I propose to allocate Rs. 5,000 million augmenting the
already allocated Rs.17,005 million in the Appropriation Bill.
6.4.5. Plantation sector
Honorable
Speaker,
To conquer the
international market, our aim is to build a value-added plantation crop
industry which is equipped with modern technology. Through that we expect to,
increase foreign exchange earnings, and
increase the planters’ income
In order to reap
the maximum benefits of the plantation industry, it is necessary to ascertain
the drawbacks in tea, coconut, rubber, cinnamon, pepper, coffee, citrus,
vanilla, cardamom, cloves, and other export crops.
Accordingly, priority should be given
to,
Replantation of
crops Gap filling
New cultivations
Ensuring water
supply can increase the productivity of these crops. In addition, we seek to encourage
private investment and strategically win over the export market.
38
I propose to
allocate a further Rs. 10,000 million
for this purpose in addition to the amount allocated under the Appropriation
Bill.
6.4.6. Fisheries and aquatic sector
Honorable
Speaker,
Presently,
Fisheries products,
Fish farming in
fresh water reservoirs, Brackish-water prawns cultivation,
Ornamental fish farming, and
Fish farming in domestic ponds
are becoming vital sectors as an
industry in our economy.
I am also
delighted to state that our ornamental fish are in great demand in Europe and
America. Even during the pandemic, the government fulfilled all requirements to
facilitate these exports. Amenities will be expanded to encourage the
production of processed fish, dried fish, Maldive-fish, and canned fish.
Honorable
Speaker,
The fisheries and aquatic sector has a
potential for further development.
Accordingly,
In 2022, it is
expected to release 196 million fingerlings into the 200,000 hectares of
freshwater reservoirs and expect yield around 125,000 metric tons worth about
Rs. 18,000 million.
Numerous
programs to develop and construct the fishing anchorages and fishing harbors
are already underway.
I propose to
allocate a further Rs. 1,000 million
for these purposes in addition to the amount currently allocated under the
Appropriation Bill.
6.4.7. Livestock Sector
39
Honorable
Speaker,
Sri Lanka has
already self-sufficient in eggs and poultry. Over a long period of time, the
Government has implemented a series of programmes to meet the protein
requirement of the public. As a result of such programmes, we could
considerably increase the production of eggs and poultry. We were even able to
export poultry in 2021.
But, it is
apparent that we should strive harder with regard to milk production. We are
spending a hefty fortune for importing milk powder. Therefore, we expect to
increase milk production and enhance the consumption of fresh milk.
Further, in
encouraging medium and large scale private sector investors to engage in the
production of milk, eggs and poultry, the cost of raw materials and machinery
should be minimized.
Accordingly,
there is a need for further investment in the livestock sector. For this
purpose, I expect to allocate Rs. 1,000
million in addition to the allocation already made under the Appropriation
Act.
6.4.8. Traditional cottage industries
Honorable
Speaker,
From the olden
times, Sri Lanka had been enriched through an agro-based culture. Our people
were always engaged in creative arts whenever they got spare time. As a result,
those creative arts developed as traditional cottage industries. We have
already identified around 273 villages around the island such as Handessa,
Thalagune, Thiththagalla, Paraduwa and Bambagahadeniya which are dedicated for
industries such as rattan, Dumbara mats and brassware.
Honorable
Speaker,
These
traditional industries embody our pride and identity. There are a number issues
relating to their production. Among those, lack of raw materials is the main
issue.
40
Honorable
Speaker,
It
is required to infuse modern technology to these products, while enhancing
their quality. It is our responsibility to remove the impediments that hinder
the entry of their products into national and international markets.
Therefore, we
have entrusted the responsibility of protecting and promoting of traditional
cottage industries to a Ministry established just for that purpose. Therefore,
I propose to allocate another Rs. 1,000
million in addition to the already allocated provisions for the development
of traditional cottage industries including rattan, clay-based products, brass,
lacquer, masks, coconut shell, jewellery, stone carving, flax fibre and Dumbara
patterns.
6.4.9. Textile industry including handloom and batik Honorable
Speaker,
In the past, Sri
Lanka was also famous for textile industry like other countries such as India
and China. Handloom industry is also a traditional industry with a long
history. This industry was directly affected by the collapse of the tourism
industry in recent times.
Similarly, Sri
Lankan batik industry also accounts for a long history. It is a heritage of Sri
Lanka. But, only a few people are seen to be studying the art. The high price
of raw materials required for this industry could be one reason for this.
However, there is a group of people among us who loves the art. There are a
considerable number of people engaged in the art as a profession or as means of
self-employment. A high demand for products of these industries can be created
in local and international market through a well-planned approach. We have
targeted an export income of USD 1 billion for handloom and batik products by
2025.
Hence, I propose
to allocate Rs. 1,000 million for
the development of textile industries including handloom and batik.
41
6.5 Investment
zones for new products
Honorable
Speaker,
When basic human
needs of food, air and water are met, they want an improved lifestyle. We have
the opportunity to meet such demands. After meeting the domestic demand of
those products, we can earn considerable foreign exchange by exporting these
products. Therefore, we have paid attention to manufacturing products aimed at
both the local and foreign markets and the re-export of products after value
addition.
By doing so, we
are striving to build an export oriented economy. We will create an integrated
mechanism between the public and private sectors, we will assign annual targets
for each export sector and intervene regularly to solve issues faced by exporters
in meeting such targets.
Accordingly, there
are number fields
identified to enhance
production.
Amongst them, the following production
sectors are important.
•
Organic
fertilizer production industries
•
Pharmaceutical
production
•
Production
of raw material for textile and apparel industry
•
Rubber
industrial products
•
Export
based agro-processing
•
Livestock
•
Agricultural
equipment and machinery
•
Fisheries
and aquaculture development
•
Production
of chemical materials
•
Electric
and electronic appliances and IT products
•
Production
of sports equipment
•
Steel
and heavy metal industry
I invite the
private sector to invest in these sectors. It is our responsibility to provide
basic infrastructure for these investors. As such, we will provide land,
42
electricity,
water, access roads both internal and external, in establishing new investment
zones and for which Rs. 5,000 million
will be allocated.
Honorable
speaker,
We have
identified the following areas to be developed as proposed investment zones for
new products for each identified production sector.
•
Organic
fertilizer production - all agricultural districts
•
Pharmaceutical production - Oyamaduwa, Millaniya and
Arugambokka
•
Production of raw materials for textile and apparel industry -
Eravur, Monaragala, Puttalam and Kilinochchi
•
Export based agro-processing zones - Mattala, Elpitiya,
Hambantota and Jaffna
•
Livestock production zones - Nawalapitiya, Wariyapola and
Polonnaruwa
•
Fisheries and aquaculture development zones through private
investment - Puttalam, Mannar, Hambantota, Jaffna, Kokkadichole
•
Production
of chemicals - Paranthan, Pulmudei and Eppawala
•
Investment zones for the production of electric and electronic
appliances and IT based products - Henegama, Sooriyawewa, Kundasale and Homagama
•
Manufacturing
sports equipment - Hambantota and Sooriyawewa
•
Steel
and heavy metal industry - Mirijjawila
6.5.1. Small and medium scale enterprises at
regional and district levels
Honorable
Speaker,
Together with
the provision of necessary facilities for large scale entrepreneurs under the
investment zones for new products as mentioned above, it is also the
responsibility of the government to provide the required facilities to small
and medium scale entrepreneurs.
43
There is a
higher tendency to establish these small and medium scale enterprises in
Colombo, Gampaha and Kalutara districts within the Western Province.
Therefore,
necessary action are being taken to provide basic required facilities such as
land, electricity, water, roads and fences to encourage them to establish their
industries outside Western Province and shift industries from cities to
villages.
Therefore, the
government has directed its attention to establish small and medium scale
industries at divisional and district levels. A number of direct and indirect
employment opportunities at divisional level will get created under this
programme. I propose to allocate Rs.
5,000 million for this purpose.
6.6 Basic
infrastructure development
Hon. Prime
Minister Mahinda Rajapakse kick started making “Vistas of Prosperity and
Splendour” a reality by presenting the 2021 budget. He stated the following in
the Budget speech 2021.
“During the
discussions HE the President has had with the people of the country at the time
of the drafting of the “Vistas of Prosperity and Splendour” policy document and
after the formation of the new government, we noted that the people do not
demand subsidies or anything free from the government. They unanimously
requested rural schools to be provided with teachers of English, Science,
Technological Studies and Sports with their children’s education in mind. They
called for development of the rural hospitals for their basic healthcare needs.
The children demanded that school playgrounds and proper sanitation facilities.
Villagers requested rural roads to be built according to accepted standards in
a way that they can carry out their day to day work. They also requested safe
drinking water. They requested the government to rehabilitate tanks and canals
enabling them to be self-reliant in improving their livelihood activities. They
requested us to protect their properties and children from wild animal attacks.
44
Apart from these
infrastructure facilities, requests were also made to provide electricity,
telecommunication and technology to the village. They requested a methodology
to make their produce directly available in the market, and to obtain financing
for their economic and social activities without any difficulties.”
Honorable
Speaker,
The basic infrastructure
requirements are the foundation of development. This Government hope develop
such infrastructure under 5 sectors.
6.6.1. Water for all
Despite being a
country endowed with an extensive network of rivers, a considerable proportion
of the population of the country are suffering due to lack of clean potable
water. Clean drinking water is available only for 56 percent of the population.
As such, fulfilment of the demand for drinking water is our prime
responsibility. During the year 2022, we will focus on providing pipe-borne
water connections to approximately 200,000 households while expanding the
community water projects, developing reservoirs while taking to conserve water
sources.
Therefore,
action will be taken targeting to provide 3,314,500 new water supply
connections around the country through the completion of already initiated
water supply schemes including Attanagalle, Minuwangoda, Kurunegala, Kandy,
Anuradhapura North, Jaffna and Kilinochchi.
Accordingly, in
order to accelerate the major water supply schemes launched aiming at achieving
the benefits of “Water for All” programme, which was initiated in line with the
policy document, “Vistas of Prosperity and Splendour” to ensure 24 hour
uninterrupted clean drinkable water supply, I propose to allocate Rs.15,000 Million in addition to the
already allocated Rs. 33,963 million under the 2022 budget estimates.
Accordingly, we will reach the
45
target of 90% of
the fulfilment of the clean drinking water demand by 31 December 2024.
6.6.2. Vari Saubhagya
Honorable
Speaker
The prime objectives of “Vari Saubhagya”
programme are,
•
To
ensure food safety through the improvement of food production
•
To
facilitate the fulfilment of the demand for drinking water
•
To
meet the water requirement of industries and services
•
To
help achieve the targets of national renewable energy
by providing
sufficient irrigated water for both Yala and Maha seasons to uplift the socio
economic standards of the farmers whose livelihood is Agriculture.
Honorable Speaker
Similarly, nearly 90 percent of
construction of large scale irrigation projects like,
•
Uma
Oya Multipurpose Development Scheme
•
Yan
Oya
are complete.
Wayamba Canal, North Central Canal, Minipe Canal Mundeni Aru Reservoir Scheme,
Lower Malwathu Oya Reservoir, Kuda Vilachchi Reservoir development projects are
being implemented as planned.
Honorable
Speaker
Further, while
rehabilitating the tanks and canals identified by rural community under His
Excellency the President’s programme, “Gama Samaga Pilisandarak” (Discussion
with the Village) we will also commence work 2022 including on the following;
•
Uma
Oya Downstream Development
•
Development
of irrigation facilities in Himbiliyakada – Wattegedara
•
Construction
of the irrigation dam of Kuchchaveli – Peraru
•
Development
of Kumbukkan Oya Reservoir
•
Maduru
Oya Right Bank Development
•
Nilwala
River Downstream Development
46
Under “Vari
Saubhagya” programme, 5,000 small tanks and anicuts are planned to be
renovated. Out of those, 1,050 small tanks and anicuts have been rehabilitated
and a further 2,000 will be completed in 2020.
Accordingly,
Rs.48,237 million is allocated for “Vari Saubhagya” by 2022 Budget Estimates. A
further Rs.20,000 million is
allocated for this programme. These projects which are implemented across the
country are expected to be completed within the next three (03) years i.e. by
the year 2024.
6.6.3. Road
Development
Honorable
Speaker
It is expected
to complete our National Road Development programme, which we launched to create
a modern road network connecting the capital, cities, suburbs and remote
villages in order to strengthen the mechanism of distribution of goods and
services, and travelling for daily needs of the people and for employment,
within the next three (03) years.
Under the
100,000km of roads project, 18,000 km of roads will be completed by the end of
this year. In addition, 25,000 km of roads per year will be constructed
starting from 2022.
Under the rural
bridges programme which has been designed to provide access to remote villages,
200 bridges have already been completed and allocations will be provided to
complete the balance bridges.
Colombo Port
Access Elevated Expressway, New Kelani Bridge - Athurugiriya Elevated
Expressway, Central Expressway, Kurunegala – Dambulla Expressway, Ruwanpura
Expressway, Colombo – Moratuwa Marine Drive and the Fly Overs in the city of
Colombo will be completed with the medium term of 2022-2024.
47
Rs.260,000
million has been allocated for the year 2022. In addition, a further Rs.20,000 million will be allocated.
6.6.4. Development of Renewable energy - Electricity
for All
Honorable
Speaker
Our prime
objective is to drive towards an eco-friendly rapid development in line with
the National and International New Development Policies. Renewable energy is
highly important in that respect. We have paid our attention towards electric
Three Wheelers and Motor cars. Economy and environment will not benefit from
motor cars driven by electricity generated through carbon emitting fuel.
Renewable and Clean Energy are highly advantageous in building a green economy
and saving the foreign earnings spent on imported fuel.
For that
purpose, investment opportunities in energy sector have been opened for private
sector. In order to fulfil 70 percent of the aggregate electricity demand
through renewable energy by 2030, I propose to expedite such investments in
2022.
Honorable
Speaker
I propose to
allocate an additional Rs.500 million
for the facilitation of encouraging private investment in Renewable Energy
sector.
Accordingly, it
is expected to add approximately 2,000 Mw to the National Grid within the next
three (03) years with the support of the private sector by generating
electricity from Renewable Power Plants of Uma Oya, Pooneryn, Siyambalanduwa,
Mannar, Boardland, Moragolla and Seethawaka.
I encourage the
Local government agencies to move into the provision of street lighting through
renewable energy sources in a bid to reduce the use of fossil fuels in the
country, given that even countries with fossil fuels are now shifting into
renewable sources by 2030.
6.6.5. Housing
and Urban Development
48
Our aim is to
create an environment where each family will have their own comfortable home as
noted in the policy document of the government “Vistas of Prosperity and
Splendour”.
Already, to
realize this objective housing projects have been implemented covering all
Grama Niladhari Divisions targeting low income families in urban, rural and
estate sectors.
Honorable
Speaker,
Some possess the
capacity to build their own homes. Some others can obtain loans from banks to
construct houses.
Nevertheless,
government assistance is required for vulnerable communities living in urban,
rural and estate sectors to construct their houses.
Therefore, in
addition to the already made allocations, an extra Rs.2,000 million is
allocated for urban housing and an additional Rs.5,000 million is allocated for
the development of rural housing. It has also been planned to complete the construction
of condominiums that are already under construction in Colombo and its suburbs
by 2024.
Honorable
Speaker,
I am sure that I
need not elaborate on the condition of estate housing. The state of which is
pathetic. Their labour is one of the basic inputs of tea, which is one of the
main export crops. Therefore, it is the responsibility of each of us to uplift
the standard of living of those communities. Therefore, Rs.500 million is allocated within the next three (03) years to
develop housing in the estate sector.
Honorable
Speaker,
Urban
development is one key component in our development agenda. We have commenced
planned urban development programmes including integrated road and transport
network, comfortable housing and eco-friendly urban forests. Lakes and canals
in flood-prone lowlands in Wattala, Jaela,
49
Katana, Gampaha
and Kelaniya and also areas close to Hamilton canal will be developed in an
eco-friendly manner. In that respect, over Rs.7,000 million has already been
allocated through 2022 budget estimates and local and foreign investments are
also sought.
Honorable
Speaker,
Next, I hope to
present the Rural Development Programme. This is mutually linked to the already
presented Production Economy and Livelihood Development Programme and Basic
Infrastructure Development Programme.
6.7. “Gama Samaga Pilisandara” (Discussion with the Village) – Rural
Development Programme
Honorable
Speaker,
Four-pronged
strategy is already underway to uplift the standard of living of the people, to
develop rural infrastructure, and implement rural development programmes. Those
are;
•
Livelihood
development
•
Development
of common infrastructure
•
Environment
and sustainable development
•
Social
welfare and social development
Rural
Development Programmes and projects are already been identified in the said
sectors by community participation through Rural Committees.
Honorable
Speaker,
Our government’s
policies are driven by sensitivities to the social opinions, new trends, global
socio-economic and political changes.
Therefore,
instead of conventional factors like subjective and regional priorities,
scientific facts are considered in taking objective decisions. I believe the
reality of that would be clear to you.
We considered
the manner of allocation of funds to the rural development programme through
various administrative units.
50
6.7.1. Grama Niladhari
Division
Honorable
Speaker,
As we all are
aware, the smallest administrative unit and closest to the people is the Grama
Niladhari Division. The entire administrative structure is made up of the
collection of those 14,021 Grama Niladhari Divisions. This time we have
allocated funds for each GN division separately.
Honorable
Speaker,
Fund allocation
is not driven by the inidviduals or how powerful or not they are. All GN
Divisions including my GN division of 399 Medamulana, have been allocated equal
amounts. I will let the future decide on naming this programme- whether it is
equality or reasonableness or the democracy of the government.
Honorable
Speaker,
Rs. 3 million is allocated to each GN Division. That
means every village will get 30 lakhs of rupees, and the total allocation is Rs.42,063 million. The people of a village
will have the authority to decide on the type of development projects required.
The Chief Incumbent of the village temple, clergy of the Kovil, Church, Mosque,
rural community leaders and all the villagers can actively engage themselves in
this process. Rural requirements can be identified by a forum of government
officials and rural political leaders.
6.7.2. Local
Government Divisions
Honorable
Speaker,
Local Government
Division which is under the local government agency is the smallest unit in the
political structure. The total number of local
government divisions is 4,917. Budgetary allocations have been made
separately for each local government
division. One division is provided with Rs. 4 million. That is forty lakhs.
Accordingly, it needs to be mentioned
that Rs. 19,668 million will flow to 4,917 local government divisions.
Honorable
Speaker,
51
I would like to
reiterate to this House that discrimination, whether on political or any other
reasons, is not our way. Therefore, allocations have been made available
through 2022 estimates irrespective of the political party, to fulfill the
development expectations. This government is therefore creating a new political
culture. I trust that the future will also follow this example.
6.7.3. Decentralized
budget of the Members of Parliament
Honorable
Speaker,
It is decided to
increase the budgetary allocation provided to all Members of Parliament for
development activities of their respective divisions by Rs.5 million.
I firmly believe
that through this, the expectations of 225 Members of Parliament, including
you, at district level can be achieved in a wider scale. It is a victory of the
people.
Every member of
the Parliament will be provided an allocation in 2022 of Rs.15 million of
development budgetary allocations and the total
allocation would amount to Rs.3,375 million.
6.7.4. Divisional
and District Investments
Honorable
Speaker,
What do we
expect by allocating such an enormous amounts of funds for rural development? I
would use the next few minutes to give a clear answer to that question.
Our foremost
objective is to strengthen the rural economy, raise the income level of rural
families, liberate them from the subsistence mentality, integrate their
economic activities to the mainstream, increase Gross Domestic Product and
minimize the income disparity.
52
Therefore,
economic processes have to be implemented through a structural programme from
home garden to extensive farmlands and from domestic products to factory
productions.
This Budget has
assumed that historic responsibility. This extensive concept will be
implemented through a three-pronged approaches:
•
Regaining
the lost income sources
•
Development
of available revenue streams
•
Creation
of new revenue generation sources
Honorable
Speaker
All the District
Secretaries and Divisional Secretary have been made aware of this and
instructions have been given already. Accordingly, all the officials, are
awaiting to commence the rural livelihood development programmes with a new
vigour. The total allocation covering all 335 Divisional Secretary’s Divisions
and 25 Districts amount to a further
Rs.19,894 million.
Provision of
these allocations is based on land, population and other socio-political
factors.
Honorable
Speaker
I propose to allocate Rs.85,000 million (in rupee lakhs, 8
lakhs and fifty thousand) for “Gama Samaga Pilisandara” (Discussion with the village)
Rural Development Programme.
Honorable
Speaker
We have created
a conducive environment for the investment of public funds subject to the full
approval of this House, to be utilized within a financial management framework
of stringent financial discipline, transparency and accountability. We have to
ensure value for money in every project that is implemented. It is the
responsibility of all the public servants and elected officials that this
public money is invested in productive projects and all those
53
projects should
be monitored and followed up to deliver the impact for the people.
Honorable
Speaker
We can trace
back all budget estimates in the recent history from 1886. I would like to
point out that this is the first instance when such a huge amount of allocation
is provided for rural development.
6.8 Providing
relief for those affected by Covid 19 pandemic
Honorable
Speaker
The present
government is faced with biggest challenges that had never been faced by any
government in the history. Tourism sector has come to a standstill. Government
revenue decreased. In comparison to such decrease in revenue, the government
expenditure rose unexpectedly.
However, amidst
such challenges, a huge amount of funds was spent on vaccination and to improve
health facilities to relieve people from the pandemic situation. Vaccination of
75 percent of the population is a significant achievement.
Government took
care of all those who were affected including those who lost their livelihoods
by granting relief packages. However, small and medium scale enterprises are
still not out of the woods and they still require further support to integrate
with the mainstream economy for which further concessions will have to be
provided.
6.8.1 Relief for micro, small and medium scale
businessmen
Honorable
Speaker,
We have
recognized the importance of providing relief to the micro and small
businessmen, especially those who sell kadala, wade, quid, porridge, hoppers,
king coconuts, young coconuts, who have become unable to do business being
affected by the pandemic. Similarly, medium scale industrialists too deserve
relief.
54
Therefore, it is
proposed to allocate an additional Rs.5,000 million in addition to the already
provided allocation to provide relief to micro, small and medium scale
businessmen representing all sectors that were directly affected by the actions
resorted to by the government to control the Covid 19 pandemic.
6.8.2 Relief for school van owners who lost income
during the period when the country was locked down
Honorable
Speaker,
During past few
months with the closure of schools owners of school vans and buses lost their
income in full. We must understand that they lost their livelihoods and yet had
to continue to pay lease rentals and incur expenditure on maintenance of the
vehicle resulting in an additional burden. Having understood these issues, I
propose to allocate Rs.400 million
is allocated for to provide relief to the school van and bus owners.
6.8.3 Relief for Three Wheel owners who lost
income during the period when the country was locked down
Honorable
Speaker,
Three Wheel
owners serve as an essential service providers in our daily lives. I propose to
allocate Rs.600 million to provide
relief to the Three Wheel owners who lost their income since those vehicles
could not be driven during the past few months.
6.8.4 Relief for private bus owners who lost
income during the period when the country was locked down
Honorable
Speaker,
The service
provided by the private bus owners is very important. Due to the closure of the
country and quarantine rules, private industry was affected severely. Being a
people’s government we have understood this issue. Therefore, I propose to
allocate Rs.1,500 million to provide
relief to the private bus owners who lost their income.
55
6.8.5 Special sectors that lost income during the period of
lockdown Honorable Speaker,
Income sectors
that relied on Arts and Entertainment and Weddings and Event Management came to
a complete halt due to the Covid pandemic. Loss of employment and revenue stand
at a very precarious level. Due to the lack of maintenance of technical and
other devices in the sector, restarting the profession is also in a complex
situation. In certain cases, in order to restart the activities additional
expenses may have to be incurred. As such many artists have been severely
distressed.
What we have to
do for the benefit of all is to immediately restart all the activities. In
order to facilitate that, government has successfully fulfilled its fundamental
responsibilities including vaccination. Yet some more needs to be done It is
proposed to allocate Rs.500 million
to facilitate and motivate the sector.
6.9 Environment and Sustainable Development Honorable Speaker,
Environment
conservation and development are closely linked sectors. Simultaneously with
the rapid development, a conflict between man and environment exists.
Therefore, managing it is the responsibility of all of us.
6.9.1. Conservation
of environment
Honorable
Speaker,
Garbage disposal
to the environment has become a national issue. We have paid our attention to
urban forests and beautification including conservation of water, soil, noise
management, solid waste management.. Under “Surakimu Ganga” conservation
programme, priority has been given to conservation of 103 rivers and river
valleys in the island in eco-friendly manner, conservation of eco-sensitive
area of Muthurajawela and as a Ramsar wetland. Accordingly, additional Rs.2,000 million is allocated in
addition to the already made allocation for environment conservation.
56
6.9.2. Forest
conservation
Honorable
Speaker,
Simultaneous to
the population growth settlements grew and the effect on the forest cover is
immense. Therefore, I propose to allocate Rs.2,000
million in addition to the already made allocations to conserve our
available forests and to
•
Increase
the forest cover by 30 percent
•
Protect
the catchment areas
•
Removal
of invasive plants and increase forest cover with beneficial plants
6.9.3. Wildlife
conservation
Honorable
Speaker,
In order to
obtain water and food for the animals from the forest itself, small tanks are
habitats are expected to be developed. While controlling the animals that
damage agriculture, protecting wildlife is both our duty and responsibility.
Therefore, I propose to allocate Rs.1,000
million in addition to the already made allocation to conserve wildlife.
6.10 Public services and rural infrastructure facilities
Honorable Speaker,
Under public
services and rural infrastructure, we primarily pay attention to education,
health, development of indigenous medicine, development of sports facilities,
small irrigation, vocational and technical training facilities and passenger
transport.
6.10.1 Education
57
Honorable
Speaker,
It became
evident through the demands of the school children in most of the villages in “Gama
Samaga Pilisandara” (Discussion with the village) programme of His Excellency
the President that investments in education through physical infrastructure
developments like school buildings do not manifest the real benefits of
education. This is a matter of concern.
Honorable
Speaker,
With the
objective of making rural schools attractive, the programme to establish “1,000
National Schools” is implemented as a priority development project of the
government by establishing national schools in 123 Divisional Secretary’s
Divisions where there is no National School and uplifting the facilities of
secondary schools.
Thereby, class
rooms, desks, chairs, toilets, drinking water, electricity, renovation of
teachers’ quarters, provision of school instruments, laboratory building and
required equipment, aesthetic units and required facilities will be provided
and reforms will be introduced to maintain technical subject stream.
Honorable
Speaker,
Rs.2,200 million
has been allocated through the Appropriation Bill to establish 1,000 National
Schools and it is expected to complete the programme by implementing
expeditiously within the next three (03) years. In order to accelerate the
programme and for other developments in education sector I propose to include
an allocation of Rs.5,300 million as
a budget proposal in addition to the already made allocation.
6.10.2
Development of health/indigenous medicine
Honorable
Speaker,
In this respect, I propose to allocate Rs. 5,000 million in addition to the
already
allocation
Rs.32,650 million
for the development of agencies that continue
Children’s and maternal
clinics, Rural hospitals,
dispensaries, offices of
58
Medical Officers
of Health, Ayurvedic dispensaries, Yoga and clinics for mental health.
6.10.3
Development of Sports facilities
Honorable
Speaker,
Sports is
essential to maintain physical and mental wellbeing. It is our responsibility
to improve sports facilities both in the city and village. Therefore, attention
is paid to develop sports facilities in villages and school playgrounds, and
indoor sports facilities. Accordingly, I propose to allocate Rs.3,000 million for sports development
in addition to the already made allocation.
6.10.4 Minor
irrigation
Honorable
Speaker,
It is proposed
to increase the allocation by Rs.2,000
million to implement programmes including rehabilitation of small tanks,
anicuts, canals, tank bunds and catchment areas under minor irrigation schemes.
6.10.5
Vocational and technical training
Honorable
Speaker,
Skilled youth is
essential for the development of the country. Skilled work force is an asset to
the country. The foreign earnings brought in by skilled labour is very high.
Even in the private sector there is a huge demand for multi-skilled young
labour.
Therefore, it is
expected to allocate Rs.2,000 million
in addition to the already made allocation to provide facilities for technical
and technological education and city universities and to improve the existing
facilities for vocational and technical skills after school education.
6.10.6 Passenger
Transport (Railways and SLTB)
59
Honorable
Speaker,
On the path
towards prosperity by gaining the contribution of the entire country for the
development process, establishment of an efficient and effective transport
system that addresses the needs of country is a must.
Honorable
Speaker,
Having
identified the opportunities in both the public as well as private transport
sectors, it is important that such expansions in the transport sector be
promoted. I propose to allocate a further Rs.2,000 million in addition to the
allocation provided through the annual budget estimate for National Transport
Commission, Department of Motor Traffic, Sri Lanka Transport Board and Sri
Lanka Railways to maintain their services with new technological methods and to
provide a comfortable, efficient and disciplined transport services for people
establishing connectivity between the cities and the villages.
6.11 Public
Security
6.11.1 Judicial
Reforms and provision of infrastructure
Honorable
Speaker,
In order to
avert delays in the judicial process, alleviate inefficiencies, a considerable
amount of funds were allocated. In addition to the Rs.6,937 million, I propose
to allocate Rs. 5,000 million to
make the judicial functions efficient through digitalization of human resources
required for reforms in laws related to criminal, civil and commercial laws and
to ensure the continuity of the programme to develop Court infrastructure
facilities.
6.11.2 Public
Security, Law and Order
Honorable
Speaker,
Government has
given a very high priority for public security. The institutions established
for that purpose have been playing a significant role not only in ensuring
public security but also in safeguarding the welfare of the people.
60
It is expected
to establish a community police service that works closely with the people to
curb drugs and crimes. In addition to the already allocated Rs.7,885 for
recruitment of police officers and to provide facilities for the community
police service that is already in place, I propose to allocate a further Rs.500
million
6.11.3
Improvement of sanitary facilities of detainees in prisons.
Honorable
Speaker,
It has been
reported that there are sanitation issues due to the congestion in prisons
since the number of detainees has gone up and infrastructure facilities have
not been improved. Therefore, in addition to the already allocated amount for
the improvement of sanitary facilities of all prison inmates, I propose to
allocate an additional Rs.200 million.
6.11.4 Providing facilities for our senior citizens and persons
with special needs Honorable Speaker,
In spite of the
severe curtailment of the revenue flows, we continued the implementing of
welfare programs for the elderly. It is important to note that in spite of the
challenges to revenue, the government did not resort to suspending these
welfare programmes.
Therefore, in
ensuring that the elderly are continuously protected while providing facilities
for those with special needs, I propose to allocate Rs. 1,000 million.
Such funds will
be utilized to establish the necessary facilities at village level facilitating
the senior citizens a healthy and a happy lifestyle, while also improving the
facilities required for those with special needs.
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6.12 Securing
the Home Economy
Honorable
Speaker,
The government implements
a large number of social welfare and relief programs. Nearly 50 such programmes
are in place. Given the number of programmes, I will not read out the full
list. Nevertheless, it is worth mentioning a few of them. Pensions, Samurdhi
benefits, elders' assistance, nutritional food allowances for school children,
and the Suraksha student Insurance scheme are some of the main schemes. The
annual expenditure on these programs is close to Rs.600,000 million.
With the Covid
pandemic, increasing in global fuel prices, gas prices, shipping costs, and
cost of production of goods and services have had an upward pressure on the
prices of goods and services globally. As a result, prices of goods and
services in the local market too have risen leading to a cost of living hike.
The
expenditure on social welfare and relief programs is a significant portion
compared to the total government expenditure. The time has now come to ensure
if certain benefits, such as the Samurdhi, actually are provided to those who
actually deserve such benefits. We must encourage the Samurdhi beneficiaries to
rethink their consumption patterns and inculcate a savings and an investment
culture. The society at large demands that we take a critical view of this
matter.
Therefore, we
are in a dire need of a suitable mechanism which has faith in the poor, develop
a positive attitude about themselves, improve entrepreneurial skills, add good
value to village-based products, improve quality, familiarize modern
communication technology, connect with the market network, and transform to be
empowered to stand on own two feet while being enriched and self-sufficient in
nutritious food. It is in this context that the Home Economy Security Program
which includes three-components will be introduced.
Accordingly, I propose to allocate Rs. 31,000 million to
provide relief to people under this Home Economy Security Program.
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6.12.1 Nutrition
basket for pregnant mothers
Honorable
Speaker,
The intellectual
development of a child takes place mostly in the mother's womb and in the early
periods from birth. As such to ensure that nutritional requirements of both the
baby and the mother, the Home Security Programme will give priority to ensuring
nutrition needs of the new born children by supporting the lactating mothers.
Therefore, I
propose to extend the provision of the nutrition basket for pregnant mothers
which is valued at Rs.10,000 each for a period of 24 months from the current 10
months.
Accordingly, apart from the existing allocation for this program, a
further Rs.
1,000
million will
be allocated.
6.12.2 Home Food
Security Program - Relief Basket
Honorable
Speaker,
Together with
the nutrition of the mother and the baby, the nutrition of the family becomes
significant. Therefore, an allocation of around Rs. 15,000 million will be made to implement a program identifying
economically poor families at the GN
Division level and provide them with a relief basket to alleviate the pressure
of the cost of living hike.
6.12.3 Establishment of a mini
supermarket chain for women entrepreneurs – Home Shop
Honorable
Speaker,
Up to now, we
have allocated funds for programs designed to nourish the family, including the
mother and the newborn child. Similarly, their need for economic empowerment
should also be fulfilled. Therefore, we are
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implementing an
island-wide new economic development program focused on women entrepreneurs.
This programme
is based on the experience gained from distributing essential food items to the
village during the Covid pandemic. Accordingly, the need emerged for a
mechanism which
•
Meets
the food requirements of the rural people
•
Sells
home-made edibles, groceries, and other products
•
Integrates with the main supply chain by networking using
information technology
•
Ensures an uninterrupted supply and distribution even in the
event of any disaster
I allocate around Rs. 15,000 million to this
program to establish a mini supermarket network at the Grama Niladhari Division
level.
6.13 Public
service
Honorable
Speaker,
Although public
services operates incurring an enormous expense expecting an efficient and
effective public service; owing to the rigid laws and regulations, and lengthy
and outdated administrative methods and procedures, the public has to exert a
lot of effort, time, and expense to connect with government agencies for their
needs.
6.13.1 A
client-centric public service – Digitization
Honorable
Speaker,
Therefore, to
increase the productivity and efficiency of the public service, making it
client-centric, and to digitize the public service, an in addition to the
allocation of Rs. 3,500 million a
further Rs.500 million will be provided.
6.13.2
Motorcycles for public officers
Honorable
Speaker,
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In 2014, we
launched a program to provide motorcycles aiming to increase the efficient
provision of public services offered by the field officers. 146,381 field
officers obtained motorcycles under this initiative and I am happy to see that
they are still using these motorcycles to provide public services.
Honorable
Speaker,
I have planned
on reintroducing this program and implementing a system of transferring its
benefits to the public servants. I propose to allocate Rs. 500 million for the activities necessary for this.
6.13.3 Elimination
of Teachers’ and Principals’ salary anomalies
Honorable
Speaker,
Given that the
government through the Cabinet decision dated 30 August 2021 has agreed as a
matter of policy to eliminate the Teacher –Principal salary anomalies, thereby
ending the trade union activities, and therefore, for the expeditious
implementation of such policy, I propose an additional Rs. 30,000 million be included for salary payments.
This is in
addition to the current allocation of
over Rs. 109,000 million on teachers' and principals' salaries.
6.13.4 Job
confirmation for graduates
Honorable
Speaker,
Steps will be
taken to offer permanent appointments from January 2022 to over 53,000
graduates who are already recruited to the government service as trainees.
It is expected
that around Rs. 27,600 million will be necessary for this and the entire
provision will be allocated from the budget this year. Accordingly, Rs. 7,600
million will be allocated for this purpose in addition to the amount already
allocated.
65
6.13.5
Compensation for the victims of political victimisation during 2015-2019
Honorable
Speaker,
Measures will be
taken to allocate Rs. 100 million as
compensation to those who have been politically victimized during the period
2015-2019.
6.13.6 Eliminate
pensioners’ pay anomalies
Honorable
Speaker
In response to
the continuous requests to correct the pension anomalies, the Government has
focused on creating an appropriate mechanism to correct the pension anomalies.
Accordingly, Rs. 500 million will be
allocated to undertake the initial action required.
6.14 Allocation under Special Financial
Provisions
6.14.1 For
maintenance of Buddhist temples and shrines
Honorable
Speaker,
Our village
based lie has been centered on the Temple since the ancient times. That is our
rich heritage. However, many of our Buddhist temples and shrines, in extremely
remote areas often lack even the basic needs and infrastructure. As such to
support essential maintenance and construction of Buddhist temples and shrines
located in extremely remote areas I propose to allocate Rs. 500 million.
6.14.2 Indemnity and compensation for
persons who went missing at various periods
Honorable
Speaker,
Budget
allocations are made to compensate the disappearances of people during
different eras owing to various reasons. I propose to allocate another Rs. 300 million in addition to the
present provision to do justice to the families of such missing persons.
6.14.3
Government Contribution to Professional Associations
66
Professionals
make a remarkable contribution to the development of the country. Their
professional knowledge should be transferred to the new generation. It is their
responsibility to liaise with international professional bodies and bring new
global knowledge to the motherland.
I propose to
include an allocation of Rs. 100 million
to support professional associations.
7.0 Revenue
Proposals
Honorable
Speaker,
7.1 Government revenue shows a downward
trend as a percentage of the Gross Domestic Product. Therefore, government
revenue which was 21.9 percent during the period of 1950-1999, has plummeted to
16.3 percent during 2000-2009. After a gradual decline, government revenue
further reduced to 9.2 percent in 2020 owing to the impact of the Covid-19
pandemic.
Honorable Speaker,
7.2 When compared with peer countries,
revenue of these countries are relatively higher than that of Sri Lanka. It is
20.2 percent in Malaysia, 20.6 percent in Thailand, 18.3 percent in India, and
17.6 percent in Singapore. In some emerging economies, government revenue is
maintained at levels over 25 percent. For example, it is 29.4 percent in Brazil
and 25.3 percent in China. Government revenue lost owing to the inefficiencies
in our tax administration is also a significant portion. Therefore, we need to
improve our tax compliance.
Honorable
Speaker,
7.3 Despite the decline in the government
revenue, government expenditure has increased. The unusual impact of the Covid
pandemic has also contributed to this. Interest expenditures of the Government as
a percentage of the government revenue is 71.4 percent in 2020. Salary payments
as a percentage of government revenue increased to 57.8 percent in 2020.
Recurrent expenditure increased to Rupees 2,548 billion in 2020. Government
revenue has
67
come to a level
which is insufficient to cover the day-to-day recurrent expenditure. Therefore,
deficit in the recurrent account, i.e. government revenue over recurrent
expenditure, as a percentage of Gross Domestic Product has increased by 0.6
percentage points from 1.1 percent during 2010-2014 to 1.7 percent during
2015-2019. This has increased to 7.9 percent in 2020.
Honorable
Speaker,
7.4 Similarly, the deficit in the primary
account (total revenue minus other expenditure, excluding interest payments) as
a percentage of the Gross Domestic Product was 1.5 percent in 2010, and has
increased to 2.9 percent in 2015, and to 4.6 percent in 2020. This depicts the
increase in government expenditure, excluding interest payments. Total debt
stock increases as this expenditure gets added to the initial loan amount.
Accordingly, our target is to record a surplus in the primary account by 2025.
Honorable
Speaker,
7.5 Apart from the budget surplus recorded
in 1954 and 1955, the country has been incurring a budget deficit continuously.
This deficit has grown to 11.1 percent in 2020. Accordingly, the debt stock has
also increased. In 2020, the total debt as a percentage of Gross Domestic
Product increased to 101 percent.
Honorable
Speaker,
7.6 As a result, we are now mindful of the
requirement for Fiscal Consolidation. We will make every effort to reduce the
budget deficit to 8.8 percent in 2022, 6.1 percent in 2024, and 4.8 percent in
2025. We expect a balanced budget in 2028. In order to reduce the budget
deficit we need measures for, solid expenditure management, increasing
government revenue, and restructuring loss-making public enterprises.
Honorable
Speaker,
7.7 As soon as our Government was elected;
we took measures to create a simple, transparent, and an effective tax system
aiming at facilitating tax payers and an improved tax compliance. Through these
tax revisions we expected to protect the small and medium scale entrepreneurs
from the rigid taxes and debt traps,
68
and divert
savings from reduced taxes to investments. However, our expectations met with
challenges, owing to the Covid pandemic. Nevertheless, the tax revisions also
became incentives cushioning the impact on the people from the pandemic.
Honorable
Speaker,
7.8 I the following proposals are expected
to strengthen the government’s financial position. Similarly, it is expected
that these proposals will become helpful to rebuild the economy from the post
Covid position.
Honorable
Speaker,
7.9 One-time taxes
I.
A one-time tax surcharge of 25 percent is proposed to be
imposed on persons or companies with taxable income over Rupees 2,000 million
for the year of assessment 2020/2021. Rupees 100 billion is expected to be
earned through this tax.
II.
VAT on banks and financial service providers under supply of
financial services by specified institutions is proposed to be increased to 18
percent from 15 percent. This tax should be paid monthly from 01 January 2022
to 31 December 2022. Furthermore, this tax should not be shifted to the
customer. Rupees 14 billion is expected to be earned through this tax.
Honorable
Speaker,
7.10 Social Security
Contribution
Aiming to
rebuild Sri Lanka economy affected by the Covid pandemic, a “Social Security
Contribution” is proposed. This contribution will be charged at 2.5 percent on
the annual threshold turnover exceeding Rupees 120 million. Rupees 140 billion
is expected as revenue through this contribution. This will be effective from
01 April 2022.
7.11 Tax on Cigarettes
69
Tax on
Cigarettes is proposed to be increased with immediate effect. As a result, the
price of a cigarette will increase by Rupees five (5). Government expects a
revenue of Rupees eight (8) billion through this initiative.
7.12 Excise Tax
It is proposed
to increase Excise tax with immediate effect. An additional revenue of Rupees
25 billion is expected through this tax increase.
7.13 Motor Vehicles
7.13.1 It is proposed to impose a fee on vehicles meeting with
accidents with the opportunity of reimbursing this fee from the insurance.
Through this initiative, it is expected to reduce the number of motor vehicle
accidents.
7.13.2 In addition, it is proposed to impose a fee on vehicle
modification, alteration, and refurbishment; and, subject to an amnesty period
to pay fines, legally register illegal motor cars and motor cycles, if they are
in condition suitable for road.
7.13.3 Similarly, it is proposed to release all vehicles seized
at the Sri Lanka Customs owing to non-payment of applicable taxes and other
reasons. Such release will be subject to the applicable taxes and fines.
7.13.4 It is expected to earn an additional income of Rupees
four (4) billion from these proposals.
7.14 Tax
Administration
7.14.1 This government took several initiatives from the 2021
budget to simplify the tax administration and improve its efficiency. For this,
it is proposed to further strengthen the Large Tax Payers Unit (LTU) and Upper
Corporate Unit (UCU) to improve revenue collection from large tax payers.
7.14.2 Similarly, it is proposed to remove weaknesses in the
digital revenue collection systems of the revenue collection bodies; Revenue
Administration Management Information System (RAMIS) of the Department of
Inland Revenue and Single Window System of the Sri Lanka Customs.
70
7.14.3 In addition, it is proposed to expedite the
implementation of the digital revenue collection system of the Excise
Department and simplify the excise licensing process.
7.14.4 Furthermore, it is proposed to introduce a mechanism to
examine the accuracy of the tax documents when filing through the above
systems, and allow, at every possibility, to present digital invoices and
documents as valid documents.
7.15 Money earned by
the Perpetual Treasuries Limited
In order to
examine, investigate, and report on the issuance of the Treasury bonds during
the period 01 February 2015 to 31 March 2016, the former HE President appointed
a tri-party Presidential Commission of Inquiry chaired by retired Supreme Court
Judge K.T. Chithrasiri.
As per the
report of the aforementioned Presidential Commission of Inquiry, during the
period 01 February 2016 to 31 March 2016, when selling Treasury bonds to the
Employees Provident Fund, other statutory entities, and government
institutions; Perpetual Treasuries Limited has made profit mainly through “price
sensitive inside information” and “market manipulation”. Therefore, this report
identifies that Rupees 8.5 billion is received by wilfully violating the
provisions of the code of conduct issued by the Central Bank of Sri Lanka under
the Registered Stock and Securities Ordinance No. 07 of 1937, to the primary
dealers on best practices.
According to the
recommendations of this Commission, and without hindering the legal actions
taken by the Attorney General, it is proposed to transfer to the Treasury the
Rupees 8.5 billion that the Perpetual Treasuries Limited has earned in
violation of the Code of Conduct of the Central Bank of Sri Lanka.
7.16 Leisure License Fee
It is proposed
to issue a license under goods and service tax for the designated areas to be
developed as special zones for leisure activities.
71
7.17 License issued by the Telecommunications
Regulatory Commission of Sri Lanka
The Telecommunications Regulatory
Commission of Sri Lanka issues licenses
for telecommunication services,
including, fixed phone operations, mobile
phone operations, internet service providers, and satellite broadcasting
operations. As those obtaining these
licenses make a substantial investment on
telecommunication services, it is
proposed to issue these licenses through an
auction. Furthermore, it is proposed to
sell by auction the 5G frequencies to be
included the information technology
field.
8.0
Macroeconomic vision for a revival
Honorable
Speaker,
In preparing
this budget, I attempted to focus on the five main balance sheets required to
open up our country locally and internationally in a manner that strengthens
the national production economy.
1.
Human Resource Development that targets people of our country
(Human Resources Profile)
2.
Environment
conservation enriched by bio diversity
3.
Balance of payments that includes our international trade and
financial activities
4.
Public Finance and National Budget that includes the government
revenue and expenditure
5.
Banks
and financial activities
Honorable Speaker,
8.1 “Vistas of Prosperity and Splendour“ focuses
on an eco-friendly sustainable development enriched with biodiversity. As such,
we resolve on organic agriculture in that respect. Vari Saubhagya, Surakimu
Ganga, Integrated Road Investment Programme, Inclusive Connectivity and
Development Project, Renewable Energy programme were proposed as development
approaches in this budget. Proposals have been made for various sectors
required for the National Production Economy that builds on those. Many proposals
were presented on the protection of environment, food security, safe water and
land, security of the people and national security.
Honorable
Speaker,
Proposals were
presented for an inclusive economic development with benefits for all provinces
and people. Within the first two quarters of 2021 the country
72
could achieve an
8 percent growth in the production economy. Although it was a growth amidst the
recession in 2020, through the proposals that I have made, I anticipate an
economic growth of more than 6 percent during five year period of 2022-2027.
Together with the restoration of the supply of goods and services, the entire
budget process is directed to reduce the rate of increase of the cost of
living.
Honorable
Speaker,
8.2 Human Capital Development is considered
as the centre of our economic development strategy. A huge investment made to
vaccinate more than 75 percent of the population of this country and provide
them with a booster dose needed to maintain their immunity to protect them from
the Covid-19 virus was made because human resource development is of high
priority. In line with that, I have paid special attention to land, water,
food, housing, and healthy environment, as well as, skills-based education and
sports facilities by covering the various facets of human resource development.
We also focused on the task of building a prosperous family by nurturing
religious and cultural endowments. I presented various proposals to create the
environment needed to improve their economic activities, alleviate their
economic hardships, and fulfil their changing ambitions and future
expectations.
Honorable
Speaker,
8.3 We must have a vision to build
international trade, finance, and foreign exchange reserves in our country. We
must admit that at present we are concerned about our foreign reserves and the
debt stock. The previous government, that made us inherit it, should admit
that. We are making efforts to manage this situation in the short run with the
support of our friendly countries.
Honorable
Speaker,
8.4 However, our goal should be to
sustainably build our foreign reserves to a secure level. My goal is to
increase our country's official foreign reserves to USD 10,000 million by 2027.
To achieve this, it is my intention to increase our total exports which is
being diversified, to USD 19,000 million by 2022.
Honorable
Speaker,
8.5 Increase in our exports to USD 10,028
million by October 2021 is encouraging. I have set a target of USD 11,900
million for the whole year. Similarly, expenditure on imports for the same
period is USD 16,588 million. I have set a spending target of about USD 18,900
million for this year. Therefore, the trade deficit during this year would to
be about USD 7,000 million. The cost of imports will be around USD 26,800
million by 2027. Therefore, I expect to stabilize the trade deficit at around
the same level of the ongoing year.
73
8.6 In 2022, a trade surplus is expected
amounting to around USD 1,000 million, including from tourism, ports, and IT
export services and I have spelt out policies and measures in this budget
speech to increase it to USD 8,000 million in 2027.
Honorable
Speaker,
The net foreign
remittances is expected to be around USD 6,850 million in 2021 and it is my
expectation to increase it to reach USD 8,000 million by 2027.
Honorable
Speaker,
8.7 Transactions such as dividends and
interests that occur in the form of international current payments and
receivables need to be maintained to match the promotion of foreign investments.
However, due to restrictions in current account and the tendency towards
commercial financing, our country has not become attractive for foreign
investors and Sri Lankan enterprises and individuals that are based abroad.
Therefore, the balance of transactions also incurs a deficit. The said deficit
is approximately USD 2,000 million per annum.
Honorable
Speaker,
8.8 The totality of what I have been
explaining points to a deficit in the external current account. That is why the
attention is directed towards the afore mentioned exports, tourism, information
technology, and revenues from foreign employment in order to turn the present
deficit of USD 1,100 million to a surplus of USD 6,000 million in the year
2027. Therefore, it is the responsibility of all of us to add a minimum surplus
of USD 1,000 to the balance of payments each year within the period of next 5
years in handling the international trade of goods and services as well as
international financing.
Honorable
Speaker,
8.9 Balancing the government budget has
become our primary responsibility while managing the enormous socio-economic
challenges that have piled up from years of either the failure to provide
sustainable solutions or viewing issues from a political biasness. It is a fact
that every government since the independence has pursued a deficit budget
policy. This deficit, which was about 6 percent of the national income in the
1960s, has exceeded 10 percent from time to time from 1978. During the period
2010-2018, this has been around 7 percent and again has exceeded 10 percent. We
are now experiencing the consequences of these policies that have been in place
for almost 70 years. Even among us as people’s representatives, the common
political mentality is to conveniently evade the issue rather than take
decisive action breaking away from the norm. We consider that the mandate,
which the people gave us, is to
74
build an
economically strong country by moving away from the commonly tread path during
our period in office.
Honorable
Speaker,
8.10 Financial
activities of the government will not improve by merely through the collection
of taxes, and fees and charges. To create a sustainable financial discipline it
is necessary to control the public expenditures prudently. We cannot delay
building a culture of managing public finances with suitable measures to
maintain expenditures at levels the government revenue can meet. As such, we
must take action to prune our expenditures to match the revenue, having
undertaken a continuous assessment of the process where the traditional
approach is to match the finances to support the recurrent expenditures.
Honorable
Speaker,
8.11 The timely
disbursement of welfare expenditure, maintenance expenditure, and development
expenditure has become a constant challenge amidst interest, salaries,
pensions, loan installments, repayment priorities approved by this Parliament.
Owing to lags and leads in terms of both revenue and borrowings, the Treasury
is often unable to obtain the required finances in time for release to fulfill
the cash requirements. As a result, public finance management has become an
issue, leading to unsettled supplier bills while the development and the
quality of public service plummets.
Honorable
Speaker,
8.12 We need to change
this trajectory. The budget deficit which had been talked about for 72 years
has become the central issue in the entire economic process. I outlined above a
number of ways in which we must approach a public budget management that can
balance government revenue and expenditure, and I must inform this House that I
have not underestimated the difficulties in implementation. We need to face the
reality. Therefore, my vision is to manage the overall budget to reduce the
budget deficit from the 10 percent of national income level at present to 1.5
percent by 2027. We need to strengthen tax administration so that government
revenue, which is 9 percent of national income at present, can increase to 18
percent by 2027. It is in this context that I have introduced an economic
development model that provides growth opportunities for both individuals and
business, while expanding the tax base together with an increase in the tax
compliance among individuals and businesses.
Honorable
Speaker,
75
8.13 As I mentioned
before, in addition to encouraging personal savings, the government also needs
to save through its budget management, and the aim is to increase budget
savings to 5 percent by reducing recurrent expenditure, which is about 16
percent as a percentage of national income at present to 13 percent by 2027.
The decisive year here is 2024. It is because this is the year in which the
surplus in the current account is expected to grow. I expect the full
cooperation of both the Members of Parliament and public officials in getting
to this point.
Honorable
Speaker,
8.14 Therefore, the
development expenditure which is currently about 3.5 percent of the national
income can be increased to 6 percent by 2024 and it is expected to increase to
around 7 percent by 2027. It is expected that such increase in the public
investment is possible due to the expected savings derived from the budget. As
a result, I believe that public debt, which is currently around 102 percent,
can be reduced to 74 percent. My expectation is to reduce foreign debt as a
percentage of national income from 36.5 percent to 13.6 percent. This includes
the a further reduction of the stock of International Sovereign bonds to USD
8,000 million through sustainable financing as proposed in the these budgetary
reforms which include changing the composition of foreign loans through
sustainable financing.
Honorable
Speaker,
8.15 My budget vision
presented is a challenging path which, I believe all of us must take together.
It is a more disciplined path of public finance control different from the
deficit budget path. Getting used to it can be difficult at first. But I firmly
believe that this is a path that will strengthen the country, the nation, and
the economy.
Honorable
Speaker,
8.16 We need to
celebrate the victories we achieved in the operations of our banks and
financial institutions in the last 72 years. I like to recognize the
establishment of Employees Provident Fund in 1957, People’s Bank in 1961,
nationalization of Bank of Ceylon, National Insurance Corporation in 1960s,
National Savings Bank in 1971 as revolutionary changes in banking and financial
sector in our country. Rural areas of the country could access banking and
financial facilities because these institutions opened a branch network targeting
rural areas. If not for the state Banks and entities, Private Banks and
Insurance Companies would never tread there.
However, during
the last few decades, state banks and insurance companies, were financing
institutions in petroleum, electricity, chemical fertilizers in particular,
which were more inclined towards financing the government
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budget.
Therefore, a significant progress has not shown in financing for the
development of enterprises and technology, housing and agriculture or ordinary
depositors. Similarly, the government’s pledge loan scheme which is granted on
concessionary rates to purchase the agricultural harvest of the farmers has
turned out to be a financial tool in the hands of big businessmen.
Honorable
Speaker,
8.17 State banks and
financial institutions such as State Investment and Mortgage Bank, Housing
Development and Finance Corporation, Sri Lanka National Savings Bank, Regional
Development Bank have not transformed to development financing. Except for
Samurdhi Bank system, no other micro-financing institution has become
productive to the rural economy. Cooperative Rural Bank system needs to be
strengthened. Operations of financing and leasing companies are also in the
same state. Financing companies like ETI, the Finance Company have fallen
apart. This adversely affects the entire finance sector. Credit Information
Bureau has become an impediment for small and medium scale enterprises. With
the privatization of National Development Bank, the development banking system
was effectively done away with. At the 2021 budget, Hon. Prime Minister pointed
out the need of a development bank which is a collaboration of the afore said
state banks that works for the small and medium scale enterprises.
Honorable
Speaker,
8.18 In the meantime,
the fees levied by banks and financial institutions on clients for various
transactions including savings have become complex. A need has emerged to make
those fees equal. Therefore, I propose that Central Bank of Sri Lanka and the
Ministry of Finance should start wide ranging reforms in these sectors taking
the report of the Presidential Commission on ETI also into consideration.
Conclusion
Honorable
Speaker,
9.0 During the so called “Virtuous” and the
regimes of “Good Governance” the path that the country was heading was never
beneficial. His Excellency the President Gotabaya Rajapaksa is fearlessly
committed to change that direction for the sake of the future of this country.
Honorable
Speaker,
9.1 We have embarked on a journey to build
the country initiating with the introduction of organic agriculture and an
economy of renewable energy to move away from the traditional route we have
been on. The infrastructure
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facilities that
we provide, not only benefits the construction sector, but also facilitates the
market connectivity, health and public services and the education sector to
develop. Enrichment of biodiversity and environment conservation generates
sustainability. The budget of the country, balance of payments and banks and
finance sectors should together contribute to it. Human Resource Development
should be targeted to build a stable social economy. I believe that the path
for establishing an independent sovereign state is through such an approach.
Honorable
Speaker,
9.2 Many developing countries have now
become prosperous nations. Scholars and businessmen of our country migrated for
employment in those countries. Those countries became prosperous not only
because of the physical infrastructure such as modern airports and ports, expressways
and apartments. But because the economies of those countries were strong. Their
institutions like banks, ports, customs and Inland Revenue developed in tandem
with through the utilization of technological advancements. Those countries
achieved a trade surplus by exporting value added industrial and technological
products instead of exporting primary raw materials. Instead of maintaining
deficit budgets for more than 70 years, they increased the government revenue
exceeding the expenditure and created a saving within the budget.
Honorable
Speaker,
9.3 These countries also were willing to
allow their public and private entities to become profitable by allowing
professional management’s operational freedom without getting obsessed with the
ownership, resulting in these entities and the countries becoming prosperous.
They established facilities to draw students from foreign countries. Having
developed the health facilities to high standards, these countries were able to
attract the foreigners including ours to these medical facilities. Banks and
financial institutions were turned from being primary commercial banks that
maintain deposits and loan accounts to financial institutions equipped with a
range of fully-fledged instruments.
Honorable Speaker,
9.4 The Budgetary framework that I
presented to make our country a prosperous land can be made a turning point
only though embarking on a development route of similar to those “prosperous
countries”. That is why the support and approval of is required of all the
Members of this House, upon whom this responsibility is bestowed.
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9.5 It is my utmost duty to thank all of
you before concluding my budget speech.
§
I respectfully thank Venerable Chief Prelates and all venerable
sirs, Religious leaders of Hindu, Catholic and Islam religions for the
blessings extended for the preparation of the budget
§
I wish to extend my gratitude first to His Excellency Gotabaya
Rajapaksa for giving me this opportunity to formulate a futuristic people’s
budget at this challenging hour
§
I wish to thank to our exemplary leader Hon. Prime Minister for
all the noble guidance given.
§
I would like to extend my gratitude to Hon. Speaker for making
available all the facilities and support to present my maiden budget speech.
§
Hon. Ministers, Hon. State Ministers, Hon. Members of
Parliament, your unstinted support is much appreciated.
§
I place my respectful thanks to Secretary to His Excellency the
President, Secretary to the Ministry of Finance and the entire staff of the
Ministry of Finance, All Secretaries to Ministries and State Ministries,
Government Agents, Divisional Secretaries, Heads of Departments and Government
Institutions and the entire public service.
§
I thank the Secretary General of Parliament and his entire
staff
§
I also thank Hon. Governors and former Members of Provincial
Councils, Representatives of Local Government agencies for the critical support
they extended.
§
I respectfully thank all the private sector chambers of
commerce, civil organizations, trade unions, representatives of professional
bodies for their active engagement in formulating the budget.
§
I thank all the citizens including rural community leaders
§
I thank all the constituent parties of Sri Lanka Podujana
Peramuna and all the organizations therein
§
In addition to all of this, I extend my heartfelt gratitude to
my fellow countrymen who patiently waited for the presentation of the budget
having endured the toughest of times during the Covid pandemic.
Honorable
Speaker,
In conclusion of
my budget speech I would like to quote a thought from Mahagamasekera one of our
greatest literary figures.
Dharme
Cassim
Rajasunderam
All gather here
Let us come together
Let us make this world a better place than it is now.
May the Triple Gem Bless you all!
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