Documents tabled

¶ 01 - In forthcoming Fiscal Risk Statements, the Government intends to publish results of financial strength and risk analyses for 41 non-financial SOEs using the IMF’s SOE Health Check Tool, enabling risk ratings per entity and assessment of portfolio stability over time. (Financial sector entities under CBSL and IRCSL supervision are excluded as they are independently supervised.)

¶ 02 - Risk mitigation steps taken over the last two years to improve SOE performance and address risks, including: - Cost-reflect pricing in electricity and fuel; water tariff formula reflecting actual service costs. - Liability restructuring: transferring legacy debts to the Government balance sheet; clarifying obligations between SOEs and State entities. - Allowing private sector participation in generation, transmission and distribution; improving efficiency, transparency and accountability (expert committee to review Electricity Act; liberalizing petroleum market—suppliers increased from 3 to 5 in 2024; broader competition reforms). - SriLankan Airlines restructuring: revised business plan (without privatization) approved in Dec 2024; exploring viable models. - Water sector reforms: Cabinet-approved water tariff policy and formula; NWS&DB signed Statement of Corporate Intent (SCI) in July 2024 with KPIs for oversight. - SOE Restructuring Unit and institutional development to strengthen governance and operations across 52 major SOEs. - Review of electricity sector reform policy; temporary suspension of the Electricity Act, No. 36 of 2024, pending approvals; granting greater operational and financial autonomy to CEB.

¶ 03 - Required contents of the FSS under the Public Financial Management Act, No. 44 of 2024: fiscal targets and policies; debt reduction timetable; strategic priorities; alignment with responsible fiscal management objectives; MTFF; performance assessments and compliance risks; key fiscal risks; macroeconomic impacts of major fiscal decisions over the past three years.

¶ 04 - Specific policy measures supporting fiscal sustainability: - New legal framework: PDMA (No. 33 of 2024) in force from June 2024; PFMA (No. 44 of 2024) from August 2024; establishment of the Public Debt Management Office (Dec 2, 2024); publication of the Tax Expenditure Statement. - Major tax policy reforms—base broadening and indexation: - From Jan 1, 2024: VAT rate 15% to 18%; removal of most VAT exemptions for key items; VAT registration threshold cut to Rs. 60 million/year (from Rs. 80m); SSCL registration threshold cut to Rs. 60m (from Rs. 120m); excise duties indexed by 14%; alcohol excise up 14%. - From Jan 11, 2025: excise duties indexed by 5.9%; alcohol excise up 5.9%. - From Apr 1, 2025: PIT relief increased from Rs. 1.2m to Rs. 1.8m per annum and PIT rate bands adjusted: - Taxable annual income (Rs m): 0–1.8; 1.8–2.8; 2.8–3.3; 3.3–3.8; 3.8–4.3; above 4.3 (marginal rates adjusted accordingly). - Tax administration and institutional modernization: - IRD: establish Criminal Investigation Unit; simplified PIT return for 2023/24 for employment/interest-only taxpayers; expand Risk Management Unit; abolish SVAT by Oct 2025 and set up an exporter VAT refund unit; establish an Internal Affairs Unit. - Customs: launch 2024–2028 Strategic Plan; establish Internal Affairs Unit; roll out “80 Days of Excellence” with weekly KPI scorecards; reform risk rules and container inspection success rates; implement ASYHUB. - Excise: commence revenue administration system; enhance nationwide licensee supervision; implement 100-day enforcement (20 May–27 Aug 2024); launch 1913 24/7 hotline; establish central lab for stringent quality control of alcoholic beverages; set up Risk Management Unit and Financial Intelligence Unit; introduce a mobile app to verify legally produced beverages via secure labels.