Hon. (Dr.) Upali Pannilage - Minister of Rural Development, Social Security and Community Empowerment

¶ 01 Hon. Deputy Speaker, today we are debating the Fiscal Strategy Statement presented under the legal provisions mandated by the State Financial Management Act, No. 44 of 2024. We have tabled this Statement in Sinhala, Tamil and English.

¶ 02 During the debate, two points were raised. One Member said the Statement does not specify targets. Another Opposition Member countered that targets exist but are not properly sequenced and need to be reformatted. A more serious matter was that instead of commenting on this Statement, a new Member cited a report of a Committee appointed by our President, selectively quoting from it, and said he would table that report. Hon. Deputy Speaker, our Government appointed that Committee and, to ensure public awareness, we have presented its report. We are happy to have done so.

¶ 03 However, listening to some speeches, the public might wonder whether some have just awakened from slumber or undergone a political reincarnation. One Member staged many media shows to try to take control of the Colombo Municipal Council, even sidelining his own party leader, and now, unable to bear the pain of that failure, he throws random statements into this debate.

¶ 04 We understand well the economic crisis, the social dislocation and the cultural distress caused over decades by those who were in power. The people also understand this clearly.

¶ 05 This Fiscal Strategy Statement focuses on several key areas. I will highlight three:

¶ 06 - Safeguarding fiscal discipline: As a State, we must use public funds transparently, with discipline, and protect them. The President has often said the people’s tax money must be protected like a sacred trust. We consider careful, supervised use of public funds essential.

¶ 07 - Reducing the debt burden: As you know, as at 21 September 2024, the country was mired in a severe debt crisis spanning nearly 47 years. By 2022, total public debt was about USD 104 billion, with around USD 38 billion as external debt. We borrowed domestically and externally, bilaterally and multilaterally, and finally from international sovereign bond markets. The inevitable result was a declaration of bankruptcy. We must now reduce debt. It is difficult, but we state our target clearly: bring public debt to 95 percent of GDP, down from 119 percent in 2022.

¶ 08 - Managing expenditure: Given limited revenues, spending must be tightly managed. We will keep primary expenditure around 13 percent of GDP. With these aims—fiscal discipline, lower debt, and disciplined spending—the Statement sets out critical steps to stabilize State finances.

¶ 09 We must plan. As Benjamin Franklin said, “Failing to plan is planning to fail.” For nearly 47 years, some leaders effectively “planned to fail,” culminating in the 2022 bankruptcy. Those who caused failure now engage in strange political exercises.

¶ 10 We are strengthening revenue mobilization with close oversight. As of 19 June, key revenue agencies have exceeded targets: Inland Revenue at 101 percent, Sri Lanka Customs at 106 percent for the first six months of 2025, and the Excise Department at 104 percent by 19 June 2025. This shows planned fiscal management and close monitoring.

¶ 11 On expenditure, we have introduced a new political culture of restraint—from the President and Cabinet to MPs—cutting waste, prioritizing only essential spending, and aiming to keep expenditures within a strict envelope. Mismanaged, ad hoc spending in the past helped drive us to crisis. From 2005–2014, a disproportionate share of national resources was poured into a single province—expressways, stadiums, ports, bird parks, conference halls—without proper return analyses. We will not repeat that. We target a primary surplus of about 2–3 percent and keep primary spending near 13 percent of GDP while consolidating revenues into the Treasury.

¶ 12 We will protect fiscal discipline, expand revenue efficiently, and manage spending prudently. With that, I conclude. Thank you for the opportunity.