Sri Lanka (Commonwealth Union)_ President Ranil Wickremesinghe of Sri Lanka presented the government’s 2024 budget, highlighting the need for stringent reforms to navigate the current economic challenges faced by the financially distressed island nation. Despite making efforts to control hyperinflation, President Wickremesinghe revealed that the nation’s economy is still far from complete recovery. While expressing satisfaction with returning the derailed economy to a semblance of stability, he candidly acknowledged that the populace continues to endure hardships. Notably, the inflation rate, which stood at a staggering 70 percent in September 2022, has been reduced to a more manageable 1.5 percent in October of the current year.
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To avert the specter of another bankruptcy, President Wickremesinghe stressed the necessity of implementing rigorous reforms. As part of these initiatives, he proposed the issuance of shares for two state banks to the public and investors, along with government injections to maintain their stability. Revealing the financial burdens faced by state employees, President Wickremesinghe announced an increase of Rs 10,000 and Rs 3,000 in cost-of-living allowances for 1.3 million state employees and 700,000 pensioners, respectively, which will be effective in 2024. This announcement comes on the heels of street protests by state employees the previous week, demanding a Rs 20,000 wage hike.
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President Wickremesinghe conveyed a clear message that the government can no longer resort to printing money or relying on external borrowings for state expenditures. He attributed protests against investment projects, such as the Trincomalee oil tank farm development with India, to political trade unions. The president outlined plans for a special presidential task force to oversee the comprehensive development of the entire Trincomalee district in collaboration with India.
Highlighting the economic challenges, President Wickremesinghe disclosed a monthly state expenditure deficit of Rs 168 billion, with the government obligated to pay Rs 220 billion in loan interest. This revenue shortfall was a significant factor noted in the International Monetary Fund‘s first review of the 2.9 billion dollar bailout. Notably, the budget speech did not provide information on the timing of the second tranche of the IMF four-year bailout.
President Wickremesinghe underscored that this budget is not designed as an election budget for 2024, as it did not include popular handouts. The next presidential election is mandated to be called by mid-September of 2024 and must be conducted before the end of November. In navigating the complex economic terrain, President Wickremesinghe’s budget announcement reflects a commitment to pragmatic reforms and fiscal responsibility.
