The Hon. Ravi Karunanayake

¶ 01 Hon. Presiding Member, thank you for the opportunity. In debating the Ministry of Finance, Fiscal Management and Economic Development, I wish to focus on how we take the country forward from where we are.

¶ 02 The President outlined four approaches to economic management: - Competitiveness: good. - Regulation of the economy: necessary. - Active government involvement in selected sectors for challenge and supply management—example given was using the army to control rice and flour. I disagree; government must create competition and intervene only at moments of crisis, not routinely. - Direct participation in production in selected sectors—example SriLankan Airlines. Appointing a good Chair alone cannot fix a structurally loss‑making enterprise; history shows this over 77 years since Independence.

¶ 03 We must decide clearly: are we pursuing a production economy, a services economy, or an import‑trade arbitrage model? Lee Kuan Yew said, “A good plan today is better than a great plan tomorrow.” We must act now.

¶ 04 Under the Public Financial Management Act, this first Budget caps recurrent and capital outlays from GDP—4 per cent for capital, 9 per cent recurrent; overall spending limits set at 13 per cent of GDP, and debt to 94 per cent of GDP. The Budget seeks Rs. 700 billion (US$ 2.3 billion) externally and Rs. 3,100 billion domestically. Primary surplus is targeted at 2.4 per cent of GDP. Total expenditure is Rs. 8,835 billion; deficit Rs. 2,200 billion; capital spending Rs. 1,315 billion. But three months have passed already due to holidays and impending elections. Have we actually spent Q1 capex or only estimated it? Capital spending is tomorrow’s income.

¶ 05 The plan is to raise revenue to 15 per cent of GDP—about Rs. 5 trillion—an increase of 24 per cent over last time. Tax expert Gajendran stated in the Sunday Observer on 9 March that meeting this year’s tax target is very unlikely. We must be creative in raising revenue and controlling expenditure, mindful of input‑cost inflation like oil.

¶ 06 This year’s interest bill is Rs. 2,950 billion—58 per cent of estimated revenue of Rs. 5,042 billion. Inland Revenue’s target rises from Rs. 1,950 billion in 2024 to Rs. 2,250 billion; Customs from Rs. 1,550 to Rs. 2,070 billion; Excise from Rs. 214 to Rs. 240 billion. Even so, prudence is needed. Debt service—interest plus capital—totals about Rs. 4,550 billion. Past budgets, once executed, saw higher spending, lower revenue and larger deficits. Now with a new law, we must truly implement.

¶ 07 There were successes too. In 2015, we raised public wages by Rs. 10,000, increased Samurdhi by 200 per cent, set aside Rs. 25,000 per house, gave insurance, interest‑free loans for graduates, cut prices of 15 items and fuel. Government must act; generals must command, not leave the war only to soldiers.

¶ 08 You promised cuts—fewer ministries, fewer vehicles, houses not used, no helicopters, no corruption, no pensions. If those savings are real, show that Rs. 500–600 billion is reallocated to capex; then we would welcome it. We should not be a country that exports housemaids; rather, bring foreign talent here to work. Walk the talk.

¶ 09 The President himself said on 31 January at BOI: “Bottlenecks galore for investors—approval needed from 83 institutions.” Abolish these by law or mandate 24‑hour decision deadlines with deemed approvals if officials do not respond—like Estonia and fast‑growing Eastern Europe.

¶ 10 India and China offer lessons. India doubles down on Aadhaar, a ten‑year corporate plan, low‑interest credit to 100 million entrepreneurs; targets US$ 12 trillion economy by 2030 and US$ 20 trillion by 2047. China targets US$ 27 trillion by 2030 with private‑sector‑led growth; 30 per cent of global trade flows through China; big bets on AI.

¶ 11 Global wealth is highly skewed: in 2022, US$ 454.4 trillion net private wealth; 59.48 million people with over US$ 1 million (about 1 per cent) hold 45 per cent of wealth; 2.8 billion people (52.5 per cent) under US$ 10,000. Military spend by the top nations totals US$ 1.625 trillion; China, India, Pakistan together about 25 per cent of that. If Sri Lanka had even 0.005 per cent of that, we could clear our total public debt at a stroke. Highlighting the absurdity helps frame our domestic choices.

¶ 12 We restructured as a bankrupt nation; the world is watching. From 2028, we must resume paying US$ 3 billion in bilateral debt; 2028–2033: due to Paris Club, India, China, Japan—US$ 3 billion plus a new US$ 3 billion; 2033 onwards, US$ 9 billion in ISBs. We cannot wait; build a contingency fund now. Strengthen the economy: increase exports, attract FDI, boost tourism and remittances.

¶ 13 Vietnam is a success: moving from socialism to supplying competitively priced, quality labour and integrating into global value chains. We should learn from them. The IMF is necessary after bankruptcy, but we need not dance to every tune; we must be practical and propose alternatives.

¶ 14 On SriLankan Airlines: commercialize it. Restructure the CEB rapidly as well. The IMF warned unions against strikes over pay. Fair wage adjustments are needed with rationalization.

¶ 15 If you target 15 per cent from exports, discuss with IMF alternatives: do not cripple key domestic entrepreneurs. If Rs. 100 billion is lost by capping PAYE and Corporate Tax at 20 per cent, recoup it through other motivational, growth‑enhancing measures. We, in the Opposition, will help persuade the IMF: Sri Lankans must live here, not the IMF. Few IMF programmes are true success stories; Korea is one; Sri Lanka made a critical recovery under Hon. Ranil Wickremesinghe, but paid a political price—“operation successful, patient died.” If you repeat the same, you will need the same operation again.

¶ 16 Only about 4 per cent of EPF files—out of nearly 80 lakh—appear to pay tax; 527 SOEs exist; only 85 profitable; around 400 lose roughly Rs. 80 billion. Bring investment now—there are no protest placards on the streets; the Opposition offers support. Do not signal left and turn right. The 1956 “Sinhala Only” path cost us opportunities. If Sinhala, Tamil and English had remained co‑official, where would we be? 1983 riots, youth unrest, tsunami, Easter attacks—recurrent shocks derailed growth. Prevent repeats.

¶ 17 On higher education and doctors, the NCMC would have built capacity; instead, we now import doctors from other countries.

¶ 18 On Excise: raising alcohol/cigarette prices 100 per cent without controlling illicit markets simply shifts consumption to kasippu or beedi and loses revenue. Sunday Observer (March 2025) reports Rs. 80–100 billion annual revenue loss from illicit liquor. Properly regulate and capture revenue—about 7 per cent of domestic production potential—rather than pushing to the black market.

¶ 19 On foreign exchange: 2024 merchandise exports were US$ 12.7 billion; 2025 projected US$ 14 billion; services US$ 8 billion (tourism, IT, etc.); remittances US$ 8 billion—total US$ 30 billion flows. Your 15 per cent digital tax risks cutting US$ 848 million already achieved last year; even a US$ 100 million fall is bad. Do not adopt measures “just because a white‑skinned person told you.” Offer alternatives of US$ 10 billion through proactive reforms.

¶ 20 Tourism: 2.5 million arrivals are possible, yet many southern establishments are unregistered. Implement Point‑of‑Sale machine rollout—announced by the President—to ensure domestic settlement, VAT and PAL capture. Today, card payments in the south settle abroad; VAT/PAL unpaid; leakage is high. Also, allow practical licensing such as BYOB restaurants; if foreigners are served lawfully, issue licenses transparently rather than losing business and tax.

¶ 21 On currency, do not fear Rubles. Let Russians bring Rubles, accept them as forex, and use to buy fertilizer, oil, coal. The Central Bank must facilitate least‑resistance paths. Adopt it as policy.

¶ 22 Land: foreigners generally lease, not own; but current practice collects for only part of the lease term, then waives. Fix this to ensure full revenue.

¶ 23 Auditor General reports 5,000 missing government vehicles; where is the assets register? Implement it.

¶ 24 Business is profit‑driven; economies are policy‑driven. Without business confidence, investment will not come. Our firms like MAS and Brandix invest in India because they get incentives there while we tax 36 per cent on global earnings. Global earnings tax is zero in Singapore, Bahrain, Dubai. Emulate accordingly. With US deglobalization trends, protect our US market access smartly.

¶ 25 We must unite to confront cross‑border challenges. Government targets FDIs in hospitality, logistics, renewables, technology, agriculture, apparel/textiles. These have been “thrust sectors” for 15 years—do not just relabel; deliver incentives and competitive interest rates. Use Port City’s benefits smartly where appropriate.

¶ 26 Digitization: create faceless operations in Inland Revenue and Customs. “24 hours” should mean if an entry is lodged at 10 p.m., it is cleared by 5 a.m.—true around‑the‑clock processing with pre‑arrival processing and post‑audit. India removed 1,700 redundant rules and forms in eight years; do the same here. Build a cashless economy; end “bureaucratic terrorism” that stifles SMEs; uphold the rule of law.

¶ 27 Finally, when I was Finance Minister, overseas wages inflows were US$ 350 million per month; after COVID, it is US$ 200 million. Restore to US$ 350 million, add US$ 1.2 billion annually; conduct the Tea Auction in dollars. Present everything in a new way; let us build a new country. We in the Opposition want the right path, not office. Thank you.