The Hon. Thilina Samarakoon

¶ 01 Hon. Deputy Speaker, we are debating the mid-year fiscal report presented under the State Finance Management Act, No. 44 of 2024. Although the requirement to present such a report existed for years, after the economic difficulties intensified, from 2024 the process has been organized. The report should reach Parliament by the tenth month, but due to dissolution there was some delay.

¶ 02 The report covers state revenue, expenditure, cash flow and government borrowing. Compared to 2023, the 2024 figures show some progress, primarily because we acted in line with IMF understandings reached in 2022. After the worst crisis in our history in 2022–2023 — with six consecutive quarters of contraction — growth turned positive to 2.3 per cent in 2023 and 5.3 per cent in 2024. That is welcome.

¶ 03 The 2023 budget deficit was Rs. 1,242,566 million; in 2024 it is brought down to Rs. 598,698 million. Total revenue rose from Rs. 1,314,886 million (2023) to Rs. 1,860,632 million (2024). Tax revenue increased from Rs. 1,198,852 million to Rs. 1,709,305 million. This rise came largely by placing higher tax burdens on the people — over Rs. 600 billion in additional collections. Non-tax revenue, however, did not increase much: Rs. 116,034 million in 2023 to about Rs. 151,000 million in 2024.

¶ 04 A key hardship was PAYE — the tax on earnings — which hit higher-earning professionals hard, contributing to brain drain among doctors, engineers, and bankers, as Hon. Najith Indika highlighted. Also, many items previously exempt from VAT were brought back into the net, worsening cost-of-living pressures. Social welfare outlays were also curtailed to some extent.

¶ 05 From 2022 to 2024, under the IMF programme, the economy has been guided towards a framework with some stabilization — a good development. The present Government can manage better going forward, narrowing the gap between revenue and expenditure, and managing debt. We aim to reduce total public debt from 103.9 per cent of GDP in 2024 to 95 per cent by 2035 under the IMF programme. We are working to improve the balance of payments and reduce the deficit, thereby managing the economy soundly. Investor confidence is slowly returning — seen in stock market turnover and foreign interest — while diplomatic and economic relations are being strengthened. We are creating conditions for investment in production, enabling private enterprise to raise output, and improving SOE management to increase returns to the state. Reserves have risen to USD 6.5 billion.

¶ 06 Regarding PAYE, we are adjusting thresholds as part of rationalizing the tax mix. On withholding tax, the Opposition said we imposed 10 per cent. But that rate applies to monthly interest income above Rs. 150,000 (Rs. 1.8 million annually) — a very high income segment — so there should be no major issue.

¶ 07 Overall, with restructured taxation, production and services, and foreign investment, the next 2–5 years will see better outcomes. I ask the Opposition to focus on the real economic data rather than nitpicking. We have been in office only weeks, not decades like those who ruined the country. Please extend support to take the economy to a better place. Thank you, Hon. Deputy Speaker.