The Hon. (Ms.) Lakmali Hemachandra, Attorney-at-Law

¶ 01 Presiding Member, thank you for the opportunity to speak in this Budget Debate. I believe we should speak at length about this Budget. This is the second Budget of our Government. His Excellency the President set this out very clearly. In our first year, we mainly focused on securing macroeconomic stability. When we came to office, the Opposition continuously propagated the notion that under a National People’s Power Government the economy would soon collapse into a crisis. Therefore, as a Government—and as a political movement—we took responsibility to maintain continuous macroeconomic stability without committing any errors. In our first year we worked substantially to stabilize the economy and protect macroeconomic stability.

¶ 02 This is clearly demonstrated in the Budget Speech. In the first year, merchandise exports rose from USD 8.5 billion to USD 9.1 billion; worker remittances from USD 4.8 billion to USD 5.8 billion; and tourism earnings from USD 2.3 billion to USD 2.5 billion. The primary balance increased from Rs. 0.8 trillion to Rs. 1.5 trillion. The stock market is at a high level with the All Share Price Index around 23,000. Our exchange rate is at a relatively stable level though there are challenges, which we are managing prudently.

¶ 03 There is another point to emphasize: in our first year we pursued fiscal discipline across the country. That is something the nation should be proud of. The Opposition’s main line of attack in this debate has not been to dispute the facts—exports up, tourist receipts up, tax revenue up, expenditure management solid, primary surplus improved, and overall Government performance credible. Rather, their refrain is that “these are the things we did or planned to do.” This grievance stems from a kind of inferiority complex: what they could not deliver, they now claim they had planned in 2010 or 2015. They try to suggest we are not doing what we said as a political movement. I must respond, especially since Hon. Kabir Hashim cited Marx and Lenin, and Hon. Harsha de Silva made similar remarks.

¶ 04 If one understands Marxism, it is a political theory of social development where societies advance through stages: feudalism, capitalism, then socialism. Capitalism is not treated as purely negative but as a necessary step on the road to socialism. Parties representing the capitalist class bear responsibility for capitalist development. If so, why did Sri Lanka fail to achieve that development under those parties?

¶ 05 Seventy-six years after Independence—culminating in 2022—the nation ended in bankruptcy after decades under essentially the same political tradition: today rebranded as SJB from UNP and SLPP from SLFP. There are many self-proclaimed “fathers of success” here. But who is the father of failure? Why did the country go bankrupt in 2022? We failed to take necessary steps at the right time. Our “recovery” is about regaining lost opportunities. If those “capitalist” parties could not deliver, then our movement—rooted among ordinary people—must take those necessary steps. So, Hon. Kabir Hashim and Hon. Harsha de Silva, please read Marx and Lenin. Look at China: still led by the Communist Party, calling itself socialist, yet using market mechanisms; understand the governance model rather than reducing debate to labels. What any party does must be judged by the nation’s development needs today, not by claims of plans in 2010 or 2015. We must do what is necessary now.

¶ 06 On Digital ID: yes, proposals existed since 2015, but they were not implemented. Digitization is a critical step to enhance productive forces. The problem is not that you planned; it is that you did not deliver. Therefore, we must deliver now.

¶ 07 On fiscal discipline: historically the Treasury operated hand-to-mouth, without stability or discipline, which drove up borrowing and interest costs. In our first year, we built a Treasury buffer of about Rs. 1.2 trillion through stronger revenue collection and prudent expenditure management. What does this enable? First, macro-stability and readiness for contingencies. Second, interest rates: when the Government once had to borrow at 33 percent, today those rates are around 10 percent because lenders know we have buffers; that constrains quoted rates and gives us leverage. Our Medium-Term Debt Management Strategy envisages about 90 percent domestic financing next year, and the buffer helps keep rates lower, reducing interest expenditure—the country’s largest outlay—reversing the long-rising interest cost cycle. This is possible due to fiscal discipline.

¶ 08 Our economy currently relies on sectors like apparel, industrial exports, remittances and tourism. It is not yet a complex economy. We manage what we inherited, but we also have a responsibility to lift it to our development targets. The IMF forecasts 3.1 percent growth for 2026; the 2024 Economic Transformation Act under the previous administration projected 5 percent, and medium-term 7 percent. Our target is 7 percent medium-term growth—at minimum. Our strategy—debt restructuring, digitization, export-led growth, rural development and poverty alleviation, strengthening the productive economy—is geared to that 7 percent, not to IMF’s or Ranil Wickremesinghe’s targets.

¶ 09 Some say the country was already stable when we took office. In fact, after the 2022 collapse, with IMF support we restored basic stability. But the productive base—agriculture, fisheries, industry, services—was damaged. Rebuilding requires rebuilding the foundation. Hence our emphasis on SMEs and the digital economy.

¶ 10 On the digital economy: this is a general-purpose technology wave, like the steam engine, electricity, electronics or the internet, that can lift economy-wide productivity. This Budget allocates Rs. 25 billion for the digital economy, including funding for the Digital ID. We aim to issue the first Digital ID in the third quarter of 2026. We also allocate Rs. 3 billion for digital infrastructure, including the legal framework and incentives for data centres, with an initial Rs. 500 million, and five-year tax concessions for communication tower and related infrastructure. This is not to hand out concessions to businessmen for its own sake, but to crowd-in private investment alongside Rs. 25 billion in public investment to lift the entire economy.

¶ 11 As to claims we are doing the same as predecessors: their 2016 Budget espoused faith in free-market forces. Our policy is different: the State leads with public investment, policy direction and infrastructure, to drive national economic rebuilding. The State was mismanaged—funds wasted on scattered buildings, some unfinished; resources misallocated; yet vast ministerial offices were built. We must rebuild the State, not just hand out to cronies or “business friends.” Our instrument is the State; our compass is policy.

¶ 12 On time, Presiding Member? If I may conclude briefly: we will recruit 75,000 into the public service to end dysfunctions and address gaps; introduce a State Asset Management Act and rationalize State property; and we will shoulder obligations such as the Rs. 25 billion interest relief to senior citizens and legacy statutory payments of 10 public institutions through this Budget. Understand the integrated strategy, not isolated snippets.

¶ 13 With the additional two minutes granted: we must empower the digital economy under State leadership; Rs. 80 billion is allocated for SME credit support; energy sector reforms include an Energy Transition Act in 2026, integrating energy, transport and the digital economy. This is a Budget Debate; let us avoid frivolity.

¶ 14 On estate workers’ wages: claims were made that tax relief to companies would trickle to wages. Government cannot guarantee that general tax concessions will raise private wages—this was the Gotabaya administration’s approach, cutting taxes without assessing who benefits, which shrank revenues and led to bankruptcy. We are implementing targeted policies. We will provide a targeted Rs. 200 allowance directly to estate workers—benefits that reach workers, not diffuse tax breaks. All reliefs in this Budget—tax concessions or others—are targeted and linked to our overall strategy.

¶ 15 Thank you for the time.