The Hon. (Dr.) Harsha de Silva

¶ 01 We see Ministers boasting in various places saying, “We know everything; our Government will be here not just five years but 15.” In a discussion, a Minister labeled our critique as an evil statement — we saw it on TV — disgraceful. We saw the Matale incident the other day: a person from the IVP went to someone’s house threatening them because they posted criticism of the Government on Facebook — it went viral. This also happened under President Gotabaya Rajapaksa’s time. They were in high arrogance. When the country was slipping, we, as the Opposition, pleaded with them not to do such things but to go to the IMF in time and stabilize the country before collapse. Professionals told them the same. They did not listen. I remember them pointing at the Opposition and saying, “You can have your say, but we will have our way.” Meaning, whatever you say, we don’t care; we’ll do what we want. They grabbed all the Parliamentary Committees. The Opposition had barely any opportunity to express its views.

¶ 02 Mr. Speaker, there is an old Greek maxim: hubris leads to nemesis — arrogance paves the path to ruin. That is why some cannot tolerate political criticism and tell people to “shut up.”

¶ 03 Why am I saying this? Because I believe the Hon. President will not act that way, and I have reasons to say so. I recall about two and a half years ago, in the Lobby, he and I had a big argument — about whether sovereign bonds could be restructured. He said “No.” I said “Yes.” He did not accept my view that day; he even said, “Let me give you, then,” to me. But a couple of days later, he and I spoke for about 45 minutes on the phone and I clarified matters to him. That day I spoke to “Anura.”

¶ 04 I said, “Anura, this is how you do it; let’s do it this way.” Then he was in the Opposition and so was I. In the end, he accepted it. So, following that example, I believe that during a whole month of budget debate, this two-thirds Government that calls others “evil” can listen to criticism from the Opposition; accept constructive criticism and act to lift the country from where it has fallen. Because even if we are in the Opposition, this is our country. The country’s collapse is not only of JVP, Pohottuwa, SJB or UNP; it is all of us. Therefore, all of us in this Parliament have a responsibility to help rebuild this country.

¶ 05 Mr. Speaker, I thank the Hon. Leader of the Opposition, Sajith Premadasa, for allowing me to open today’s debate on the 2025 Budget, and I look forward to responding to what was presented yesterday.

¶ 06 Let me begin with a question: Can a church priest deliver a sermon in a temple? That is the question. Do not misinterpret me — this is not about religion; it’s a thought experiment. You can flip it: can a temple monk conduct a church mass? Difficult. Some might try; possible even. But not easy. For example, one may draw on the Sigalovada Sutta to preach economics; then the question arises: have we accepted the Dhammapada while abandoning the Bible? Mr. Speaker, this is the kind of conflation we are forced to analyze today.

¶ 07 I showed a cartoon yesterday by Hasintha Wijenayake in “Aruna.” Cartoons reflect what people talk about. It shows the former President on one side, the Secretary to the Treasury in the spinning chair, and President Anura on the other side. The budget presented by the President is given by the Secretary to the Treasury to the current President — this is what people discuss.

¶ 08 In 1970-77, Dr. N. M. Perera, as the LSSP Finance Minister, presented his first Budget, seeking to transform Sri Lanka into a socialist polity, clearly laying out the political-economic ideology in the first Budget. Let me read a few lines from his statement of 25 June 1970:

¶ 09 “Mr. Speaker,

¶ 10 It is a great privilege to have the honour of presenting the first Budget of the United Front Government ....

¶ 11 On the 27th of May, 1970, the people of this country endorsed the programme of the United Front placed before them and gave the Front an overwhelming majority with a mandate to carry through this programme. In the process, the country has rejected the policies hitherto followed by the United National-cum-Federal Party during the period 1965-1970.

¶ 12 In repudiating and rejecting the policies followed by the U.N.P.-F.P. Government, the country has endorsed the programme of the United Front of the Sri Lanka Freedom Party, the Lanka Samasamaja Party and the Communist Party. That programme lays the foundation for the building up of a socialist society. It assumes as its thesis that a developing country cannot leave development at the mercy of the inter-play of forces which are motivated solely by the profit instinct.

¶ 13 We have embarked upon a unique task.”

¶ 14 What does this show? They told the people their policy statement, said the UNP was wrong, and came to Parliament to present their theory and ideology — and then, after that, they had a genuine debate on the Budget.

¶ 15 Likewise, I will read a couple of excerpts from Ronnie de Mel’s 1978 Budget, which comprehensively critiqued Dr. N. M. Perera’s Budget, declared it wrong, and introduced something new — and that is how J. R. Jayewardene received a five-sixths majority to change the system. In his 15 November 1977 Budget Speech, the Minister of Finance and Planning, Hon. Ronnie de Mel, said:

¶ 16 “In the parliamentary history of this country, never before has such a great majority been obtained as on July 21, 1977.

¶ 17 By this decision the people have comprehensively rejected the policies and programmes followed by the Sirimavo Bandaranaike Government from 1970 to 1977.

¶ 18 As set out in the manifesto of the United National Party, we are committed to build a free, open and just society in our motherland.

¶ 19 Without a free and open economic foundation, a free and open society cannot be built.

¶ 20 We present this with a clear intention to build a free and open economy.”

¶ 21 My point: Dr. N. M. Perera presented his programme consistent with his ideology; thereafter Ronnie de Mel presented the UNP Government’s programme consistent with theirs. What happened yesterday? Something entirely different.

¶ 22 The very set that for a long time criticized and campaigned around the country and the world saying everything was wrong — their election manifesto, “A Prosperous Country, Beautiful Life” of the National People’s Power — states that post-independence rulers pursued destructive economic policies. Yet, with some superficial tweaks, they are implementing, wholesale, the IMF programme of the Ranil Wickremesinghe Government of 2022. The President says this Budget is based on the policy statement — the one I referred to.

¶ 23 I had a small debate with your Deputy Minister of Economic Development, Hon. (Prof.) Anil Jayantha. I asked, what is your economic model, and how do you generate growth over the next five years? The Finance Ministry uses an Autoregressive Distributed Lag model — where today’s value of a variable depends on its past values and perhaps others. He said, “No, that is the Ministry’s model; we have a different model.”

¶ 24 An Hon. Member: Do not disturb. You can reply when you speak. [Interruption.]

¶ 25 We were told: “We know how to build the economy; we have a model. Through a production economy we will create a US$120 billion real GDP by 2030.” But real GDP is measured in Sri Lankan Rupees, adjusted for inflation; we typically express nominal size in US Dollars for comparison. Please clarify: if you target real GDP of US$130 billion by 2030, what nominal rupee GDP path and exchange rate assumptions underlie it?

¶ 26 Now, 2023 GDP was Rs. 27,275 billion. 2024 GDP is Rs. 30,000 billion — nominal growth 8 percent. Official 2024 inflation final number is not yet stated, but the assumption is around 1.3 percent, implying real growth of roughly 6 percent. The wedge between CPI inflation and the GDP deflator is usually small.

¶ 27 Yesterday, the Hon. President said real growth in 2025 is expected around 5 percent. The Finance Committee discussed this; officials reported an expectation of 3 percent real growth to the Committee. We debated what inflation would have to be if real is 3 and nominal 10, etc. If GDP goes from Rs. 30,000 billion to Rs. 33,000 billion, then nominal is 10 percent — so if real is 5, inflation must be 5; or various 4 and 6, or 7 and 3 combinations. With recent negative 4 percent inflation, a low inflation year seems expected in 2025. So please show how, with low inflation, your model delivers growth after the destruction of recent years. What is the new model? Dr. N. M. Perera had a vision; Ronnie de Mel had a vision. On 7 January 2025, Prof. Anil Jayantha told Parliament (Hansard, column 609): “I spoke of the model currently in use — the ARDL statistical model — not of the model we follow. Do not misinterpret.” Very well; then please tell us the model that delivers your targets. Growth must be presented as a defensible point estimate or range per the Fiscal Management (Responsibility) Act; “between three and five” is not enough without a base case. From what we see, your 2025 growth forecast is lower than 2024.

¶ 28 The President says the Budget was built through public participation to raise production in industry, services, and agriculture — that is the production economy they mean. In growth theory — the Cobb-Douglas production function — output is a function of labour and capital (the Solow model). But how do you translate that basic function into 2, 5, or 10 percent growth? That requires ideology — a coherent stance. Since 1978, JR introduced a foundational shift; you cannot simply autoregress 76 years of “destruction” into the future. What is the change? Are we socialist, capitalist, social-democratic, social market? That is why I asked whether the sermon is mixing the Bible and the Dhammapada — or discarding one — or are we in a transition? Without belief and clarity you cannot win.

¶ 29 Example: they opposed the Central Bank independence law, arguing an elected Government must control the Central Bank; they also argued for political control of policy interest rates; and they have a section on “monetary policy” in their policy statement, conflating fiscal and monetary policy. Monetary policy is the process by which a Central Bank manages the cost and supply of money to achieve price stability; fiscal policy is Government finance. Mixing these is like quoting the Bible, Dhammapada, and Quran piecemeal: the principles clash. The very fundamentals in their policy statement contradict what was presented in this Budget.

¶ 30 On MSMEs: we heard big talk; Rs. 250 billion in loans outstanding; MSMEs contribute 52 percent of GDP and 45 percent of jobs. They promised relief tiers by loan size. I did not see a concrete interest subsidy for MSMEs in the Budget Speech. There is a separate Rs. 20 billion item, but not an interest subsidy — please clarify the MSME interest subsidy quantum relative to Rs. 250 billion book. Senior citizens’ deposits were promised 5 percent extra interest; 3 percent was given — “...will be eligible for one-year fixed deposits of up to Rs. 1 million...” Please clarify: is the 3 percent for one year only and only up to Rs. 1 million? Also show the Budgetary cost — I saw around Rs. 15 billion.

¶ 31 They ridiculed us for supporting Central Bank independence; they said interest rates must be set politically; they wrote “monetary policy” into a budget context; and now, in this Budget, they slide away from those stances without admitting it. Where is the ideological clarity? Tilvin Silva was asked by Kalum Bandara (Daily Mirror) whether JVP has departed from its fundamentals. He answered: “No, our primary objective remains building a socialist society.” He said the country fell into an abyss under imperialist-capitalist economics. If so, what are we doing now? For decades they fought reforms begun in 1977 — from education reforms to public service reforms, to opposing Indian ties, free trade agreements, MCC, and now changing the CEB Act — with tragic costs in lives and money and lost growth. After blocking the path for 48 years, now they say they will take that path — yet cannot define it.

¶ 32 Dayasiri Jayasekara: “They are searching for the path.”

¶ 33 Yes — the path is tangled.

¶ 34 They promised to lower cost of living; to sharply raise public sector pay; to reduce income tax; to allow Japanese motorbikes.

¶ 35 Mujibur Rahman: That was during...

¶ 36 They even promised Japanese motorbikes; to pay Rs. 140 per kilo for paddy. Did these happen in this Budget? I will take a few promises. They said taxes on food are unfair and will be removed. Yet the Special Commodity Levy that expired on 31 December 2024 is being continued on all imported foods — go to the Library Research Division and see the list: Rs. 50 on sugar, Rs. 200 on mackerel, etc. They said they would eliminate the rice mafia in one stroke. Instead, in December, a Gazette fixed Nadu at Rs. 220 and Samba at Rs. 230; later, rather than cut, they raised to Rs. 230 and Rs. 240. Sri Lanka Central Bank’s Daily Price Report shows Pettah Nadu at Rs. 250 and Samba at Rs. 260.

¶ 37 Candidate Anura Kumara Dissanayake said at the Development Officers’ summit that salaries would increase every six months; we said that was impossible. Our “Blueprint 3.0” proposed a minimum gross for the public service — including COLA — of Rs. 57,500. Yesterday, the President added Rs. 300 and said Rs. 57,800. The Budget Speech (p. 70) shows the current total gross at Rs. 49,550 and an increase to Rs. 57,800. But the Rs. 15,750 “increase in basic” yields only Rs. 8,250 net this year: Rs. 5,975 from April, plus Rs. 1,137 in January 2026, plus Rs. 1,137 in January 2027 — totaling Rs. 8,250. Professionals texted me saying some allowances are being cut and that some net salaries may even reduce — I have not yet fully analyzed, but please clarify.

¶ 38 They promised to raise the PAYE threshold to Rs. 200,000; we said it could not be done now. They did not — it is Rs. 150,000. We proposed to start PAYE from Rs. 100,000 with a minimal Rs. 500 levy up to Rs. 150,000 to preserve the tax base; instead, they kicked many out of the base up to Rs. 150,000 and then partially raised the threshold — and covered the loss by imposing a withholding tax on interest from 5 to 10 percent, which they never spoke about. An Hon. Minister yesterday said they did not raise taxes — but check the Hansard of 18 December: taxes were raised then; the effect is from 1 April.

¶ 39 They also raised the tax on export of services to 15 percent — this sector had been zero-rated; there was talk of 30, reduced to 15. Capital Gains Tax raised to 30 percent. On SVAT, they say it will be removed with a “risk-based refund” regime — but in practice, getting refunds from IRD is notoriously hard. Thus, these burdens fall also on those below Rs. 150,000, indirectly.

¶ 40 On vehicles: people hoped to import a Japanese motorcycle or a small car. New prices I checked: Toyota Raize ~ Rs. 12.28 million; Yaris ~ Rs. 18.5 million; Prius ~ Rs. 28.9 million. The President said increased revenue would largely come from vehicle imports. But at these prices, how realistic is the yield? This is risky.

¶ 41 They promised Rs. 140 per kilo for paddy; now they talk about Rs. 120. There was even a press release standing before three rice sacks. The President also said they will amend the Paddy Marketing Board Act No. 14 of 1971 to regulate others. That is socialist-style state control; we do not believe it works — like SLT trying to regulate Dialog. This is the same conflation of texts: Dhammapada and Bible. The truth is, there is no system change in this Budget; there is no economic model — only the ARDL echo of the past. It is not clear we can reproduce 2024 growth in 2025.

¶ 42 Mr. Speaker

¶ 43 Hon. Member, you have two more minutes.