Govt. accords priority to change the fiscal rules: Finance Ministry Secy

The government has accorded priority to change the fiscal rules with the aim of strengthening financial management by avoiding an incentive to make impractical revenue forecasts and prevent changes to the size of the budget, Finance Ministry Secretary Mahinda Siriwardena said at a virtual expert panel forum this week.

The 2024 budget is directed towards a shift from stabilisation to a growthoriented strategy anticipating a positive turnaround in economic growth next year.

He added that although the government has been able to increase public sector salaries in the year 2024, it is impossible to provide tax relief as Sri Lanka continues to be behind the revenue targets set by the International Monetary Fund (IMF).

IMF financial affairs department has been working with the government to review existing fiscal rules to better promote fiscal sustainability.

Delivering the keynote address at the expert panel discussion on “Decoding National Budget 2024: Priorities Revealed” organised by the Centre for Banking Studies of the Central Bank, the Treasury secretary noted that the country has made difficult fiscal adjustments.

In this regard, the Ministry is currently devising an SOE Restructuring Act and a National Planning Act as well as Procurement Legal Framework in addition to a Public Asset Management Act he revealed.

He expressed the belief that official creditors in the Paris Club and India will enter into a debt agreement ‘soon’.

China Exim Bank has already arrived at an agreement with Sri Lanka regarding such a debt treatment

The next step will be for the official creditor committee co-chaired by Japan, India and France to come to enter into a similar understanding, he pointed out.

Due to the debt restructuring process, banks face the risk of recording large losses which will have to be met by capital infusions from taxpayer funds, he said adding that a sum of Rs. 450 billion has been allocated for recapitalisation of banks.

Deshal de Mel, Advisor to the Finance Ministry, disclosed that VAT rate hike and the TAX base increase as well as the removal of a large number of exemptions will contribute to the revenue collection proposed in the budget 2024.

He also expects the mainly normalising imports with the anticipated lifting of remaining restrictions of essential items including the vehicles to add import related VAT and other taxes to further strengthen treasury coffers.

Several other eminent personalities spoke.