Prime Minister Mahinda Rajapaksa in his capacity as the Minister of Finance yesterday presented to Parliament the Government’s budget proposals for 2021 mainly targeting people - centric development, economic development and welfare of the people.
The proposals included solid measures to ensure fiscal consolidation to reduce the deficit, simplified tax policy and relief and give a firm push to revive the economy.
The Government also allocated Rs 18,000 million additional provisions to combat COVID-19 and also announced more relief measures for affected individuals, business enterprises and those spearheading the State COVID-19 response.
The estimated Government Revenue for 2021 is Rs. 1,961 billion. The total Government expenditure is Rs. 3,525 billion and as such the difference between the revenue and the expenditure is Rs. 1,564 billion. The Government plans to maintain the budget gap at 9 percent of the GDP since the private investments which amounted to 32.3 percent of the GDP in 2014 has decreased up to 27.6 percent in 2019 and since it is required to provide a robust start by the Government to revive the economic growth which had stagnated recently.
It also proposes to allocate Rs. 2678 billion for public service expenditure in the current fiscal year 2021 and to obtain loans subject to a limit of Rs. 2900 billion within or outside Sri Lanka.
The Prime Minister said that as stated in “Vistas of Prosperity and Splendour”, the Government simplified the tax policy from January 2020 to better facilitate tax payers and to make the tax administration more efficient. “One of the main factors, of reviving the economy and supporting the businesses to thrive, is a consistent tax policy for the next 5 years. I propose to maintain the VAT unchanged at 8 percent, for businesses with a turnover of more than Rs. 25 million per month engaged in the import and manufacture of goods or provision of services, except in the case of banking, financial and insurance sectors.”
The Prime Minister’s budget also included plans for a national expressway network, extending Colombo’s Marine Drive to Moratuwa, a three year programme to develop road infrastructure in all districts and expanding the Colombo- Kelani Valley rail network.
In his Budget speech the Prime Minister noted that the planned annual utilisation of foreign loans as agreed with the World Bank, Asian Development Bank and Japan International Cooperation Agency alone amounts to approximately USD 1,400 million. “In addition, it is expected to obtain bilateral development loans of approximately USD 400 million. Since most of these projects have very little import content and requirement, I believe this measure will also have a positive impact on foreign currency management.”
Announcing more relief to Samurdhi benefit recipients, the Premier proposed to open a Samurdhi Life Savings Account for each beneficiary.
(Daily News)