The Hon. Anura Karunathilaka - Minister of Urban Development, Construction and Housing

¶ 01 Thank you, Hon. Deputy Chair.

¶ 02 In this debate we must examine whether, as a country and a society, the presented Budget addresses the social and economic challenges we face, and whether it aligns the nation for forward movement. The President, as Finance Minister, outlines Government goals and expectations with the Budget. We must assess whether the proposals align with those objectives.

¶ 03 This is the first, inaugural Budget of the NPP Government. We promised a social transformation to build a prosperous country and better lives for all. Even if everything cannot be delivered in one or two years, the Budget should lay the foundation and direction.

¶ 04 The principal cause of the recent severe economic crisis was inadequate production of goods and services and lack of capital formation, compounded by waste, corruption, and mis-prioritized mega projects. To progress, we must see how much capital is mobilized to expand production and services.

¶ 05 As Hon. Ravi Karunanayake also noted, capital expenditure in 2025 is Rs. 1,315 billion—about 4% of GDP—an increase of 1.4 percentage points over 2024, with projections to 4.1% in 2026 and 4.2% in 2027. A further Rs. 11,280 million is allocated for regional development. If well managed, this can significantly lift rural incomes. Thus, the Budget focuses on mobilizing capital to grow production and services.

¶ 06 Recurrent expenditure rises from 17.0% of GDP in 2024 to 17.8% in 2025, but the “Citizen’s Budget 2025” projects reductions to 15.5% (2026), 15.0% (2027) and 14.8% (2028)—a path to contain recurrent spending.

¶ 07 On social protection: Rs. 749 billion is allocated; Rs. 232 billion for pensions and other welfare. Targeted relief is provided to those most affected by the crisis, within our fiscal constraints.

¶ 08 Further, not only the poorest were strained; professionals too were burdened by unfair Pay-As-You-Earn changes. Many sought modest, decent lives—housing, a vehicle—aligned to their earnings. To retain skilled professionals and keep public services functioning, we must address them fairly.

¶ 09 On salaries, this is one of the most significant basic pay increases in recent history, structured to reduce disparities. For example, a university Professor’s starting basic pay of Rs. 117,350 increases to Rs. 175,681.50 from 1 April 2025, and to Rs. 237,537 in 2027. Academic allowance changes from 20% to 112% plus Rs. 50,000; thus rising to Rs. 316,033.60. Research allowance increases from Rs. 41,072.50 to Rs. 48,506. Some miscalculations arose because people used the old basic as the base for allowances; the correct base is the revised 2027 basic. If calculated correctly, no allowance or OT/day-off payment reduces—rather, they increase. We invite unions to discuss with the Deputy Ministers and the Treasury; this is not rocket science—15–30 minutes of proper explanation will clarify.

¶ 10 On income tax relief: for instance, a senior university academic’s monthly income tax reduces by about Rs. 20,500 after the April revision (e.g., from Rs. 140,245.20 to Rs. 122,745.20); similar proportional reductions apply to other academic grades.

¶ 11 Some allege this is “Ranil’s Budget” or “an IMF Budget.” If so, such a fair restructuring of income tax and strengthening of public sector pay scales would not be present. When professionals protested earlier, they were met with tear gas and batons; the answer then was “IMF won’t allow it.” Our President has delivered fair relief while responsibly managing the program.

¶ 12 Finally, on education and human capital—core to our promise of “a prosperous country and beautiful lives”—we are addressing disparities: of the 10,126 schools, 51.4% have fewer than 200 students (5,204 schools). Public confidence has eroded where facilities and staffing are weak. To restore quality, Rs. 500 million is allocated to ensure a good school within 3 km, and a total of Rs. 619 billion—the largest recent allocation—for education: Rs. 456 billion for school education, Rs. 135 billion for higher education, and Rs. 4.4 billion for early childhood.

¶ 13 On fiscal aggregates: Total revenue Rs. 4,999 billion; primary expenditure Rs. 4,240 billion; social welfare Rs. 719 billion; capital Rs. 1,315 billion; primary surplus Rs. 750 billion; with Rs. 2,950 billion for interest and debt service being the main weight. Nonetheless, this is a responsible budget with many commendable features. Our collective duty—Government and Opposition—is to support implementation for a better country. Let us work together. Thank you.