“Essentially a Good Budget”– Eran Wickremaratne

Eran Wickramarathna

“A Budget by the IMF”– Bandula Gunawardena

Mangala Samaraweera the Finance Minister presented his maiden and Sri Lanka’s 72nd budget on Thursday and immediately and predictably ran into a storm of protest. Detractors led by the Joint Opposition spokesperson on financial matters, Bandula Gunawardena, maintained that this was a budget proposed at the whim and fancy of the International Monetary Fund. Not to be outdone and springing to the defence of his Ministerial colleague was the former senior banker and now State Minister, Eran Wickremaratne whose claim was that Mangala Samaraweera had done a ‘tremendous’ job by securing macroeconomic fundamentals and raising revenue.

“Debt Repayment Levy (DRL) Is Misleading” Editor

However one of the measures to raise revenue, the Debt Repayment Levy (already known as the Medamulana Tax in deference to former President Mahinda Rajapaksa whose home town is Medamulana) appeared to be untenable and was received by several analysts as being political in nature. They pointed out that the debt of this government of good governance alone is Rs 2,773 Billion (Rs 2 trillion 773 billion) and that at the estimated (projected) revenue for the DRL of Rs 20 Billion annually, it would take 138 years to repay. Instead they charged that this was a backdoor type of tax to raise even more money. The political fallout is that each time the tax is charged tax payers will have reason to remember the Rajapaksa administration’s borrowings. The total debt burden of Sri Lanka is Rs 10,168 Billion (10.16 trillion) On the basis that the Debt Repayment Levy is used exclusively to repay debt, the additional debt undertaken by this government alone, would take 138 years to repay and as for the total debt burden being repaid via the debt repayment levy would take 508.4 years. So much for Sri Lanka being ‘debt-free’ by the end of 2018.(as quoted by the Prime Minister).

UNP Minister Eran Wickremaratne said the Finance Minister Mangala Samaraweera had done a tremendous job by securing macroeconomic fundamentals and raising revenue so that more funds could be made available for essential services such as education, health and social transfers.

He said the finance minister had also managed to keep the budget deficit low, adding that 2018 would be a challenging year because the country would have to repay the highest debt in history.

“This budget has emphasized on building human capital rather than on hard infrastructure. That is a right decision because spending on human capital will help Sri Lanka to have a unique touch over the countries in the region. We won’t be exporting cheap labour any more as more funds have been allocated to develop universities and vocational training centres in the country,’

Joint Opposition (JO) MP Bandula Gunawardene said the budget was sure to fail as in it the government was trying to increase foreign investments by relaxing laws for foreigners and imposing excessive taxes on the people.

“This is a more liberal budget which would not offer any benefits to the people,” he said.

He said the finance minister could not present a budget beyond the conditions laid down by the International Monetary Fund (IMF) for a loan negotiated by former finance minister Ravi Karunanayake.

“According to the agreement it is the IMF which decides the expenditure of the country for the next three years. The finance minister cannot present a budget beyond the policy framework given by the IMF,” he said.