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Finance Minister Basil Rajapaksa reads his maiden Budget for 2022 as President Gotabaya Rajapaksa, who made a symbolic visit to Parliament yesterday, Prime Minister Mahinda Rajapaksa and Leader of the House Dinesh Gunawardena look on
Finance Minister Basil Rajapaksa yesterday termed his maiden Budget presented in Parliament as a “futuristic” and “people-centric” budget that would deliver inclusive economic development and make Sri Lanka prosperous, provided everyone rallies behind and supports the new framework.
Unveiling a host of progressive and innovative proposals including reforms and several controversial “one-off” measures, Basil said his Budget presented a “challenging path” but expressed the belief that the path must be taken by all 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,” Basil said in his Budget speech.
The Budget 2022, according to Basil, introduces an economic development model that provides growth opportunities for both individuals and business, while expanding the tax base together with an increase in tax compliance among individuals and businesses.
It outlines a number of ways in which the country must approach public budget management that can balance Government revenue and expenditure. “I have not underestimated the difficulties in implementation. We need to face the reality,” Basil told the Parliament.
“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 similar to those ‘prosperous countries’. That is why the support and approval of all the Members of this House are required, upon whom this responsibility is bestowed,” Basil emphasised.
He also said the proposals were presented for inclusive economic development with benefits for all provinces and people and that the development of the country will be via 10 key sectors.
Noting that the first two quarters of 2021 saw 8% growth though, in comparison to recessionary 2020 owing to the COVID pandemic, the Finance Minister said proposals in Budget 2022 would enable an economic growth of over 6% during the five-year period of 2022-2027.
He said together with the restoration of the supply of goods and services, the entire budget process was directed towards reducing the cost of living.
Basil also said his vision was to manage the overall Budget to reduce the deficit from the 10% of national income level at present to 1.5% by 2027. “We need to strengthen tax administration so that Government revenue, which is 9% of national income at present, can increase to 18% by 2027,” he added. As per Budget 2022, the deficit for the year is forecast at 8.8% down from 11.1% estimated for 2021.
Amidst banter from the Opposition benches, Basil alleged that during the so-called “virtuous” regime of “Good Governance,” the path that the country was heading towards was never beneficial. “President Gotabaya Rajapaksa is fearlessly committed to change that direction for the sake of the future of this country,” the Finance Minister added.
Having extended his heartfelt gratitude to the people of Sri Lanka who patiently waited for the presentation of the Budget, having endured the toughest of times during the COVID pandemic, Basil recalled a saying of Mahagamasekera, one of the greatest literary figures to rally people’s support: “Dharme, Cassim, Rajasunderam. All gather here. Let us come together. Let us make this world a better place than it is now.”
Basil also stressed that the National Policy Framework “Vistas of Prosperity and Splendour” was considered in its entirety in preparing the Budget 2022.
To put most of the proposals unveiled yesterday in context, the Finance Minister said the Government had embarked on a journey to build the country, initiating it with the introduction of organic agriculture and an economy of renewable energy to move away from the traditional route pursued in the past.
He said the infrastructure facilities provided not only benefit the construction sector, but also facilitate the development of market connectivity, health and public services and the education sector. 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,” Basil pointed out.
He recalled that many developing countries had 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,” Basil said.
It was pointed out that prosperous countries’ institutions like banks, ports, customs and inland revenue developed in tandem with the utilisation 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 government revenue, exceeding expenditure and created a saving within the budget,” Basil said.
“These countries also were willing to allow their public and private entities to become profitable by allowing professional managements 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 health facilities to high standards, these countries were able to attract 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,” the Finance Minister added.
In that context, he called for significant progress in financing the development of enterprises and technology, housing and agriculture for ordinary depositors. “Similarly, the Government’s pledge loan scheme which is granted on concessionary rates to purchase the agricultural harvest of farmers has turned out to be a financial tool in the hands of big businessmen,” he claimed.
It was pointed out that balancing the Government Budget had become the primary responsibility while managing the enormous socio-economic challenges that had piled up from years of either the failure to provide sustainable solutions or viewing issues from political biases.
“It is a fact that every government since independence has pursued a deficit budget policy. This deficit, which was about 6% of the national income in the 1960s, has exceeded 10% from time to time from 1978. During the period 2010-2018, this has been around 7% and again has exceeded 10%. 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 build an economically strong country by moving away from the commonly treaded path during our period in office,” Basil added.
