The Hon. (Prof.) Anil Jayantha - Minister of Labour and Deputy Minister of Economic Development

¶ 01 Thank you, Hon. Presiding Member.

¶ 02 On this final day of the Second Reading debate of the Appropriation Bill for 2025, many views were presented. Under our Constitution, this Appropriation Bill is the instrument by which Parliament authorizes control of public finance—traditionally called the Budget—projecting expenditures for the coming year and how they will be financed.

¶ 03 Unlike private or corporate budgets, a Government Budget has a normative foundation: it manages public funds on behalf of the people to realize the Government’s goals and economic vision. Thus, expenditure planning comes first, then how to finance it.

¶ 04 Accordingly, considering our objectives and constraints, we present Rs. 7,190 billion in estimated expenditure. We aim to mobilize Rs. 4,990 billion through taxes, non-tax revenue, and Government receipts and grants. The overall deficit is therefore Rs. 2,200 billion—about 6.67% of GDP. Though benchmarked ideally around 5%, given constraints, holding it at 6.67% is a significant achievement compared to last year.

¶ 05 How to finance the Rs. 2,200 billion gap? There are options: borrowing, new taxes, or monetary financing. We are not resorting to inflationary monetary expansion or new taxes. Instead, we propose to borrow Rs. 2,125 billion domestically and Rs. 75 billion externally via non-monetary market borrowing.

¶ 06 Beyond that, we must also fund debt service: Rs. 1,600 billion for amortizations and about Rs. 200 billion to cover the difference between the face value and redemption value of Treasury bills/bonds at maturity. Thus, total borrowing authority sought under this Bill is Rs. 4,000 billion—significantly down from Rs. 7,350 billion in 2024.

¶ 07 The Opposition’s refrain over the seven days, including today, has been that this is “Ranil Wickremesinghe’s Budget” or an “IMF Budget.” Rather than superficial labelling, they should have engaged with what the Budget contains and the outcomes it seeks.

¶ 08 For two decades, Budgets became symbolic documents merely to obtain legal authorization, while public interest waned as Governments spent as they pleased. Today, by contrast, society—Government and Opposition supporters alike—is actively debating allocations and sectoral flows. That is a healthy sign.

¶ 09 How is this Budget different? Regardless of labels, it breaks with the past’s short-sighted political-economic practices that led to ruin; it ends corruption and private capture in public financial management; and, instead of a mere symbolic authorization, it places public money under sound management and accountability.

¶ 10 For example, under past Budgets, large “contingency” sums were parked for discretionary use. In 2024, Rs. 200 billion (recurrent) and Rs. 100 billion (capital)—Rs. 300 billion—were set aside as contingencies. The misuse is evident. Under the 2024 No. 44 Public Finance Management Act, we now have binding limits: the Budget reserve (contingency) cannot exceed 2% of primary expenditure. With primary expenditure at Rs. 4,285 billion, the ceiling would be about Rs. 85 billion. Yet, adhering to discipline, we limited the Budget reserve to about Rs. 38 billion, reallocating the balance to targeted development, relief, and infrastructure.

¶ 11 Our Budget begins not with flowery rhetoric but with a candid analysis of the economic situation before and after taking office, identifying feasible options and choosing the best within fiscal discipline. Our theme binds vision to discipline: to exit crisis and build a humane economy, we must increase production of goods and services—raising productivity, targeting export markets, integrating with global supply chains and technology, distributing quality goods and services efficiently at fair prices, and ensuring broad-based participation and fair sharing of benefits.

¶ 12 This Government will not be a hands-off laissez-faire state. We accept full competition where suitable, but we will intervene—through regulation, market organization, institutional restructuring, creating new institutions, cooperative systems, or ensuring a meaningful State market share—where necessary to secure continuous, fairly priced, quality supplies for the public.

¶ 13 We reject the “contractionary expansion” doctrine—tightening belts with austerity, shrinking Government’s role, and hoping the private sector will spontaneously expand. That model worked only in a few high-income, resource-rich, hard-currency economies over brief periods. Instead, even in difficulty, we propose expansion by mobilizing our people and engaging international partners.

¶ 14 Under the PFM Act’s limit of primary expenditure at 13% of GDP (about Rs. 4,185 billion) and with unavoidable interest costs around Rs. 2,950 billion, we have still prioritized investment-enabling infrastructure and services.

¶ 15 There are 37 major development projects—roads, bridges, and other infrastructure—with Rs. 492,656 million allocated. In addition, the President’s new expenditure annex lists 54 proposals totaling Rs. 215,150 million across 12 thematic areas: education; health; social protection; a good and healthy life; food security and nutrition; agricultural development; environment and a green life; a peaceful and just society; national security; entrepreneurship development; sustainable economic power; and public service.

¶ 16 Notably, we have allocated Rs. 619 billion to improve quality, equity, and excellence in education, and Rs. 604 billion for health and a healthy life—unprecedented investments.

¶ 17 To support SMEs struggling with debt and collateral, we propose a new development banking modality using the National Credit Guarantee Institution to back collateral and enable fresh financing. We also set aside Rs. 3,300 million across programmes to boost MSMEs, entrepreneurship, cooperatives, youth and women leadership, tourism development, and vocational training stipends. A further Rs. 2,600 million targets education, sports, and mental wellbeing—primary education renewal, sports culture, scholarships for study abroad, upgrading regional libraries, developing the Jaffna Library, and allowances for preschool teachers.

¶ 18 On FDI: corruption and commissions deterred investors. We have removed those practices. Now we must build investor confidence with stable tax policy, stable financial markets, and exchange rate stability, along with ease of doing business and investor protection. Legal reforms are pivotal: this Budget proposes introducing or amending 11 key laws—Inter-Agency Information Sharing law (to enable data exchange among Inland Revenue, Customs, Excise, etc.), Investment Protection law, State Enterprise Governance law, PPP law, Statistics law, Valuation law, State Land Management law, Public Procurement law, and laws on microfinance, AML/CFT, among others—to modernize and enable an efficient public service and vibrant domestic production.