Finance Ministry fine-tunes populist Budget 2019
The Finance Ministry is now fine-tuning the upcoming budget 2019, the first by the United National Front (UNF) Government following the breakaway of the coalition with the SLFP, to be presented in parliament on March 5 amidst falling revenue, mounting public debt and severe balance of payments difficulties.
Finance Minister Mangala Samaraweera told a forum organised by American Chamber of Commerce this week that the upcoming budget 2019 will be “important and interesting”.
The UNF government is putting everything to win the confidence of the masses in this years populist budget calling for youths to “stand up and start-up” for its Rs. 60 billion ‘Enterprise Sri Lanka’ pro - gramme to create 100,000 new entrepreneurs countrywide
15 development projects will be implemented under the Gamperaliya, rural development programme with a financial allocation of more than Rs. 45 billion.
In addition, soft loans amounting to Rs.10 billion will be provided for both small to medium enterprises in rural areas to develop their businesses.
These rural development-oriented transformation programmes will be initiated through the 2019 budget. The Budget will be prepared in accordance with the medium- term fiscal frame work ( MTFF) by adopting a Performance-Based Budgeting (PBB) approach, with the aim of increasing government revenue to 17 per cent of GDP by 2021.
According to the Appropriation Bill, an estimated Rs. 4.55 trillion has been earmarked as expenditure for financial year 2019 while state revenues is expected to be Rs. 2.39 trillion.
It has allocated Rs. 2.2 trillion for debt servicing, the largest in the history of the country, according to the Finance Ministry.
Amendments to the Finance Act have already been gazetted paving the way to implement populist budget proposals, a senior Treasury official told the Business Times. The middle class is likely to get some relief in the budget which is expected to reflect a please-all strategy.
“A high- revenue package will be introduced under the new Inland Revenue Act and strengthened tax administration creating room for critical spending needs including relief measures for vulnerable families through a well-targeted social safety net,” a senior official said.
The Budget will be prepared in accordance with the medium-term fiscal frame work (MTFF) by adopting a Performance-Based Budgeting (PBB) approach, with the aim of increasing government revenue to 17 per cent of GDP by 2021
Treasury officials are working on various combinations to determine the proper mix ensuring that the tax burden is eased for the benefit of the middle class, a senior official said, adding that the new taxes will not be unreasonable for them.
Sri Lanka's low and middle income earners will have to pay less income tax with wider tax exemption limit and lower rates, but higher income earners will be directed to pay more with the maximum rate moving up under the 2019 budget proposals, official sources hinted.
The third reading of the budget will commence on March 13 and the final vote on the budget will take place on April 4.