Sri Lanka will today witness one of its most important budgets to-date. We are not out of the woods, and for some 2024 may be a difficult year as 2023 and 2022 was. A large section of the Sri Lankan community wants and seeks relief. 

However, it is unlikely that what relief that can be offered at this stage will fall short of the expectations of many. This is not to say that those who are struggling to get by don’t deserve relief, they do. However, practicality and resources at hand, dictates that little can be given. This will be another bitter pill we will have to swallow. Today’s Budget for 2024, despite being an election year, will likely not have many handouts, like we have seen in the decades before.

The 2024 Budget needs to be one which complies with the conditions the Government agreed with the International Monetary Fund (IMF) for the $ 2.9 billion Extended Fund Facility (EFF) bailout which has helped the island pull out of a tailspin. Compliance and credibility, especially in the eyes of the international organisations and creditor, is paramount for Sri Lanka’s recovery. The Government has already come short on its promise of increasing state revenue. As such, reaching such targets – 13% of the Gross Domestic Product (GDP) should be a key priority for President, and Finance Minister Ranil Wickremesinghe. 

Without complying to the agreed terms with the IMF, Sri Lanka risks saving face with other multilateral and bilateral creditors and causing possible disruptions for ongoing foreign debt restructuring. Wickremesinghe is expected to make his budget speech at 12 noon today.

The President will have a tight-rope walk, being without an elected mandate, and with elections around the bend, will he cave in to prioritising political survival over national survival? Let us hope that it is the latter. 

The IMF agreement necessitates the Government to raise the revenue of the State to at least 13% of GDP, which is to bring it to approximately Rs. 4,300 billion. As such, Wickremesinghe has been set a high-bar to reach, given that state revenue for this year (2023) is estimated to reach around Rs. 2,800 billion. Going by the available numbers, in 2024, Sri Lanka would have to nearly double (50%) its state revenue compared to this year. Experts have opined that the current tax structure will not allow the Government to reach this goal.

Neither will providing the bloated public sector an Rs 20,000 increase in wages. If the state sector wage increase is granted, the Government will have to cut expenditure elsewhere, or increase revenue - taxes to pay for it. Both options will not be an easy one for the Government. As such, the envisaged Rs 20,000 or even a fraction of it will be a hard sell to include in today’s budget. With “Professionals” and other middle-income communities already migrating in droves citing tax increases, another round of major tax revisions will also be difficult. However, we are in a situation where difficult choices are all we have got left.

Another need of the hour is to implement what is proposed in the Budget. Over many years we see much fanfare about budget plans and what they hope to reach, with only a few plans implemented. We have all experienced that there are budget proposals at the beginning, but after some time most of them remain unimplemented. This is due to lack of budget accountability in our constitution. Further, there are hardly any follow up reviews on implementation of policies and budget decisions in Sri Lanka. 

However, 2024 is not a year, we can let the “Government” do the budget and just complain at the sideline, we need to press the Government and policymakers to implement the decisions taken. Sri Lanka’s future depends on it as well. Given it being an election year, you as constituents will have the politicians ear, for a brief while, use it wisely. Strengthen Sri Lanka’s institutions and fiscal management.