The Hon. Wasantha Samarasinghe

¶ 01 I invite the Opposition to carefully read these strategic objectives and see whether the proposals align with them: - Sustainable and inclusive economic growth - Higher incomes through export diversification - Ensuring debt sustainability - Strengthening a production economy - Bridging the rural-urban divide - Advancing digitalization

¶ 02 These six strategic pillars underpin the 2026 Budget. However, the Opposition ignores what we already delivered in 2025 and the constraints we faced while stabilizing the economy.

¶ 03 In 2025, we made significant changes in the public service: increased salaries, removed pension anomalies, raised the minimum wage in the private sector to Rs. 27,000, rising to Rs. 30,000 next year. We committed to raising plantation workers’ daily pay to Rs. 1,700 and to stabilizing the State machinery, safeguarding reserves by tightening imports, and resuming public recruitment. Accordingly, we have already approved recruiting 75,000 into the public service this year. We gave Rs. 6,000 for schoolbooks and Rs. 4,000 for two pairs of shoes. Mahapola scholarships were increased by 50 percent and will be raised by another 30 percent (Rs. 2,500) this year.

¶ 04 We ensured independence of the law and began acting against corruption. Building on that, this Budget advances many strategic actions.

¶ 05 On pensions: Since 2016, appointment letters stated that recruits would be subject to future Government policy on pensions, meaning no defined benefit clarity for those after 2016. We have now restored pension entitlements for all who joined from 2016 onwards — a major victory for public servants.

¶ 06 On housing loans: We have allocated Rs. 500 million to subsidize interest. The loan is through banks, up to Rs. 5 million, with the Government paying 4 percent interest on the first Rs. 3 million and 2 percent on the next Rs. 2 million, while market housing loan rates are about 7 percent now.

¶ 07 On casuals/temporaries: We will regularize 9,800 temporary employees in State institutions this year.

¶ 08 On pay: We allocate approximately Rs. 110 billion this year for the second tranche of public service salary increases. Festival advances are raised from Rs. 10,000 to Rs. 15,000. We have set aside around Rs. 20 billion to remove pre-2020 pension anomalies. We will also appoint a Wages Commission to resolve salary issues hereafter.

¶ 09 On semi-government institutions: Past Governments neglected EPF/ETF/Gratuity payments in about 10 semi-state entities like Pelwatta Sugar. Some employees retired without gratuity; some have died. We have allocated Rs. 11 billion to settle EPF/ETF and gratuities for those workers — solving long-ignored liabilities.

¶ 10 On disaster loans: We increased the ceiling from Rs. 250,000 to Rs. 400,000 and allocated Rs. 10 billion to the advance account to remove processing bottlenecks.

¶ 11 On difficult-area allowance: We introduced a Rs. 1,500 allowance for Principals and teachers serving in difficult schools.

¶ 12 On unmanned rail crossings: Around 700–800 gatekeepers currently get only Rs. 7,500 even for 8–24-hour shifts; we doubled it to Rs. 15,000.

¶ 13 On private sector minimum wage: We raised it to Rs. 27,000 in 2025 and from 1 January 2026 it will be Rs. 30,000 nationwide. That implies a daily minimum of about Rs. 1,080 for 25 working days.

¶ 14 On plantation wages: We pledged to reach Rs. 1,700 per day. After discussions with planters, we proposed Government pays a Rs. 200 attendance incentive per working day if planters also add Rs. 200, moving from Rs. 1,350 to a base of Rs. 1,550 plus Rs. 200 attendance, effectively Rs. 1,750 per worked day. We have allocated Rs. 5 billion. This adds Rs. 10,000 per month for a worker attending 25 days — an unprecedented historic increase.

¶ 15 On energy and digital economy: We are advancing large renewables and green hydrogen pathways and accelerating Government digitalization to strengthen the digital economy.

¶ 16 On social support: Beyond pensions and Aswesuma, multiple assistance schemes are funded.

¶ 17 On the “Citizens’ Budget 2026”: We have published nine booklets titled “National Budget 2026 – Citizens’ Budget.” If the Opposition reads them, they will see the breadth of sectoral measures aimed at everyday needs.

¶ 18 On seniors’ bank interest: In 2022–2023, although policy granted seniors an extra 3 percent, no funds were allocated and banks paid without Treasury reimbursement. In 2025, we paid Rs. 10,000 million; a further Rs. 45,700 million remains. In this Budget, we provide Rs. 55,700 million to settle seniors’ interest for 2022–2023. Hence we are cleaning up arrears left by previous Governments.

¶ 19 On VAT: We widened the VAT net by lowering the registration threshold from Rs. 5 million per month to Rs. 3.6 million per month (about Rs. 1.2 million per day in turnover is not the concept — VAT is on value added). It is Value Added Tax: each stage pays VAT only on the margin added. Example: If brown sugar leaves the factory at Rs. 236 (including VAT), the wholesaler adds Rs. 10 and owes VAT only on Rs. 10. With transport, suppose Rs. 250 to retail; the retailer sells at Rs. 260, adds Rs. 10 and owes VAT only on Rs. 10 — Rs. 1.80. You do not pay VAT on the full Rs. 260 again. Registered traders can also claim input VAT credits. We stopped bad practices like setting off unrelated VAT across items — set-off must be within the same category. The objective is to reduce regressive taxes and broaden direct taxation while ensuring everyone who should pay, pays.

¶ 20 On IMF: We did not meekly accept everything. For example, they asked to raise salaries only below inflation — we gave more. They asked for a property tax by March 2025; we said no for 2025 and 2026. They now request 2027; we will consider only if revenue is insufficient. We align, but we protect our mandate and people.

¶ 21 On vehicles and SSCL: The Social Security Contribution Levy (SSCL) will be collected at clearance to prevent leakages at later sales; this is not a tax increase, but proper timing and administration.

¶ 22 On debt service: Claims that by 2028 we cannot pay are fearmongering. We are already paying interest. In rupees, 2024 total interest was about Rs. 2,690 billion (foreign component around Rs. 502 billion = USD 1,674 million at Rs. 300). In 2025, interest about Rs. 2,650 billion; foreign about Rs. 730 billion. In 2026, interest about Rs. 2,617 billion; foreign interest about Rs. 780 billion (USD 2,500 million at Rs. 300). By 2028, foreign interest around USD 3,259 million — an increase of USD 824 million relative to 2025. With growth in the economy, revenues, exports, tourism, FDI, and support from IMF, World Bank, ADB and bilateral partners, we can manage debt service. We also had one-off FX pressures this year due to pent-up vehicle imports of around USD 2,000 million; going forward, this should normalize to USD 1,000–1,200 million annually, allowing reserves to strengthen.

¶ 23 On inflation and prices: We did not burden the public with new taxes; we imposed protective duties only to safeguard farmers — e.g., Rs. 80 per kg import duty on potatoes and Rs. 50 on onions. We reduced prices of 40 essential items with an average reduction of 17.7 percent; 12 items increased by an average of 9.6 percent. I table the list.

¶ 24 On agriculture market failures: We are re-establishing the Cooperative Wholesale Establishment with Rs. 1,000 million to procure potatoes and onions so that no farmer has to turn back produce; with about 20 percent market intervention we can stabilize for two months.

¶ 25 Hon. Speaker

¶ 26 Hon. Minister, you have two more minutes.