The Hon. Sajith Premadasa - Leader of the Opposition

¶ 01 Hon. Speaker, as we debate Budget 2025, it is vital to assess whether it aligns with the mandate and pledges presented to the people under “A Prosperous Country, A Beautiful Life; The Country to Anura.” Examining the budget’s framework, authorship, presentation and disclosure, it is clear this Budget is not designed in line with the promises and mandate. I will substantiate with data.

¶ 02 The policy framework promised an Alternative Debt Sustainability Analysis (ADSA). That pledge has been abandoned, and instead the public bears unlimited pressure, with benefits curtailed. The 2024 Public Financial Management Act caps primary expenditure at 13% of GDP and targets a primary surplus of 2.3% of GDP. Only a handful of countries—Guatemala, Ethiopia, Sri Lanka, Venezuela, Nigeria, Iran, Yemen, Bangladesh, Lebanon, Haiti—impose such constraints. These are not electoral promises; they are binding caps that trade away the mandate.

¶ 03 We are not advocating abandoning the IMF program; rather, we urged a more people-centric path within it. Under these rigid caps, externalities cannot be corrected; provision of public goods is impaired; and social redistribution is constrained. International evidence shows such caps harm growth. The Government pledged renegotiation but has forgotten that pledge, betraying the mandate.

¶ 04 President Kennedy said, “The great enemy of the truth is very often not the lie…but the myth, persistent, persuasive and unrealistic.” Today, confusion prevails on wages and allowances. This Budget has been drafted under the 13% primary expenditure cap and 2.3% primary surplus target, leaving meagre fiscal space to rebuild the nation and protect people.

¶ 05 We engaged IMF officials, including Peter Breuer, stating we would work with the IMF but not dance to every tune. Pain exists in any program, but it must be minimized. Yet the President, in opening the Tenth Parliament, said the economy is “delicately poised” and should not be jolted, and then adopted wholesale the deals negotiated by former President Ranil Wickremesinghe—betraying the mandate and the people.

¶ 06 The President claims debt service readiness by 2028. That requires strong growth and higher revenue. Here is an unspoken fact: of 75 countries with IMF programs since 1975, 59% had to undergo a 2nd/3rd/4th restructuring; only 41% completed with one. We hope to be in the 41%, but current debt-sustainability trajectories show Sri Lanka is off the required curve—implying the need for faster growth and much higher revenue, or we risk another restructuring.

¶ 07 The President projects 5% growth in 2025, while citing World Bank data that poverty was 25.9% in 2023. The World Bank’s January 2025 projection for Sri Lanka’s 2025 growth is 3.5%. This gap must be bridged credibly.

¶ 08 On GDP via expenditure, income, and production methods—this Budget lacks clarity on how to sustain the higher growth needed for 2028 repayments, and how to raise revenue. Numbers read like fairy tales. Because of flawed primary targets, the country is in turmoil over wage increases—who gets what and when, and how it links to base pay—without clarity.

¶ 09 We also caution that the IMF and bondholder agreements rest on scenarios with unrealistic growth and revenue targets. With a fresh mandate and roughly two months until Parliament swore in 159 Government MPs, the Government could have sought immediate renegotiations for more humane terms. Even now, move swiftly beyond the EFF template and renegotiate unrealistic growth, revenue, primary balance, and expenditure targets. We were told by those who advised the previous Government on these agreements—under Chatham House Rules—that a second restructuring (pre-emptive) could be needed by 2028. That would be devastating. Act now.

¶ 10 On domestic debt restructuring: EPF and ETF were hit. With 159 MPs, why not bring proposals to grant justice to workers’ savings?

¶ 11 On poverty: handouts alone won’t end it. We need production, employment, consumption, savings, and export programs—based on solid household income-expenditure surveys and poverty lines. The Budget’s self-imposed caps create severe constraints across education and health services; even the Rs. 20,000 wage pledge cannot be met due to the 13% primary expenditure and 2.3% surplus targets.

¶ 12 Elderly savers once earned about 15% on Rs. 1.5 million deposits; now with thresholds cut to Rs. 1 million and rate changes, effective returns are near 10%—hurting millions.

¶ 13 Women’s labour force participation is around 33-34%; we should raise it to 45%. Verité Research shows a state-supported maternity benefit program would cost Rs. 6-7 billion and could boost participation markedly.

¶ 14 On excise and tobacco taxation: flawed formulas mean foregone revenue. Renegotiate with alcohol and tobacco companies to collect due taxes.

¶ 15 On pre-schools: do not restrict support to the small state-run segment; implement a universal program. Mahapola increases are welcome; but arrears must be paid.

¶ 16 Farmers face severe pressure not only in paddy procurement but across crops due to the absence of a lawful guaranteed price cycle—from inputs to purchase. Legislate guaranteed pricing and implement a statutory agriculture cycle—an idea we all supported years ago.

¶ 17 Fishers still await fuel support. The “Malaiyaha” community needs more than wages—they lack land and housing rights. Empower them with land for homes and cultivation; enable smallholder tea expansion that could materially lift national output.

¶ 18 Thousands of nurses await appointments; 35,000–40,000 unemployed graduates remain, despite a pledge to provide a plan. Do not forget that promise.

¶ 19 On “decentralized funds”: you came to change the system, but continue the same model—large pools influenced by 159 MPs. Move away from the past practices.

¶ 20 There are serious political victimizations of senior public officers—Provincial Chief Secretaries and District Secretaries being removed or transferred. Stop persecuting public servants.

¶ 21 We want this Budget to succeed. Where there are fair, people-centred proposals, we will support. But the biggest gap is the lack of recognition of the evolving external environment. US trade policy is tightening with protective tariffs affecting multiple partners. What happens to our garment exports if market access erodes? Export-market diversification—towards Africa, Latin America, South America, and ASEAN—is essential but missing here.

¶ 22 We also need to attract large-scale FDI with targeted, competitive policies; we must compete with Vietnam, Cambodia, Indonesia, Malaysia, India and Singapore. Passive approaches won’t work.

¶ 23 Our social-democratic program focuses on humane capitalism, limited but effective state intervention to correct imbalances, a strengthened and efficient welfare state, results-focused poverty eradication, regionally balanced growth at Divisional Secretariat levels, technology-led agro-industry and industry, equal empowerment of all Sri Lankans, strengthened democracy, and sustainable development, with foreign relations that add value to the nation. Within that framework we will contribute to rebuilding this country.

¶ 24 Finally, Abraham Lincoln said, “You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.”

¶ 25 Thank you.