The 2025 Budget preparation has already been set in motion. Despite the economic challenges, the Government previously granted public servants a Rs. 10,000 allowance, promising further relief as the economy improves. In line with this, President Ranil Wickremesinghe appointed a special committee to address the wage disparities among public sector employees as the economy gradually recovers.
The Government has decided to implement the recommendations of this expert committee with the 2025 Budget, which includes a planned increase in the salaries of all public sector employees by 24 percent to 35 percent starting January next year.
The Government has also resolved to increase the cost-of-living allowance to Rs. 25,000 for three years, considering 2025 as the base year. As a result, the minimum monthly salary of the lowest-ranking Government employee, including allowances, is expected to reach Rs. 55,000.
The Budget deficit is estimated at US$ 5,018 million for the coming year. To address this shortfall, the Government has secured agreements with the International Monetary Fund (IMF) to support the Budget, with the IMF expected to provide US$ 700 million.
The World Bank will contribute US$ 400 million, and the Asian Development Bank (ADB) will provide US$ 300 million. Consequently, the total debt relief is projected to be US$ 3,655 million.
As the Government’s 2025 Budget preparations are underway, insights are sought from the other political parties contesting the presidential election on September 21 on their economic plans for governing the country from January 1, 2025.
Translated by Sachitra Mahendra
Providing immediate relief with an interim Budget – SJB General Secretary MP Ranjith Madduma Bandara
On public sector salaries and pensions
Once we come into power, we will implement a comprehensive plan concerning the salaries and pensions of public sector employees. We have already engaged in extensive discussions on this matter. Our goal is not only to increase the salaries of public sector workers but also to establish a socio-economic market system in the country.
This system will ensure that no segment of the population is left impoverished while others prosper. Simply increasing salaries temporarily won’t help if the cost of living skyrockets to unaffordable levels. Unlike the current neoliberal economic policies, our approach will focus on creating an economy that enables people to stand on their own feet rather than relying on short-term relief measures. We aim to drive a massive economic transformation in the country.
On the International Monetary Fund (IMF)
Opposition Leader Sajith Premadasa has clearly said the intention to renegotiate certain conditions of the IMF agreements to ensure that they do not unduly burden the people. The current IMF conditions have led to significant tax increases that heavily impact the general public. The Government’s policy is like kicking a man when he’s down; they’ve imposed heavy taxes on low-income public servants, daily wage earners, and the educated executive class who barely make ends meet. We plan to change this approach.
On the interim Budget
As soon as we take office, we have already planned all the necessary steps to provide immediate relief to the people.
Our economic policies differ significantly from those of the current administration and the Rajapaksa regime.
Our policies are people-friendly. Accordingly, we will present an interim Budget to quickly provide relief to those who are suffering.
On addressing the Budget deficit
The current tax system is regressive, heavily squeezing the average person, while some groups remain untaxed.
The Government has failed to tax large corporations and their wealthy allies. Once in power, we will implement equitable taxation to create a sustainable economy where everyone can live with dignity.
We will follow several strategies to bridge the Budget deficit, including enhancing the country’s production economy and developing the tourism industry.
We will also attract entrepreneurs and investors to the country, using the revenue generated to reduce the Budget deficit.
On taxation and welfare policies
We will revise the existing tax policies not for political gain but for the well-being of the currently suffering people.
The current welfare system is often used as a political tool, and we intend to change that.
This Government distributes aid based on political favouritism rather than need.
We will ensure that welfare is provided to those who genuinely need it without bias.
Our focus will be on developing a productive economy that allows people to live with dignity and security, building a country where everyone can afford their basic needs.
Salary increases depend on revenue sources– JVP General Secretary Tilvin Silva
On public sector salaries and pensions
Before elections, many make grand promises. After the elections, they break them often. The JVP does not engage in politics by making false promises. We have a plan to rebuild the country. The current relief provided to the poorest citizens is inadequate; more support is needed for the most vulnerable. At the same time, the heavy tax burden on the people should be reduced. We’ve already said that the current Rs. 100,000 tax threshold should be raised to Rs. 200,000. Moreover, we must introduce a special relief package to encourage local entrepreneurs and businesses to start new ventures, essential for reviving the economy.
Although the Government talks about increasing salaries without accountability, it’s not practical. Reducing taxes and lowering the cost of goods can ease the burden on people’s lives.
Only after ensuring sustainable revenue sources can salaries be increased. We firmly believe that public sector salaries should indeed be raised. It’s essential to consider how much salaries should be increased initially, addressing the issues caused by salary disparities. We also remain committed to providing relief to people experiencing poverty and ensuring that pensions are paid.
On the International Monetary Fund (IMF)
We do not intend to negotiate with the IMF in the same manner as the current Government. A new relief package for the country must be introduced. Even if the IMF says they can’t provide relief, the country cannot move forward without some form of temporary assistance.
We should present our economic plan to the IMF and renegotiate with them to secure the necessary relief.
When drafting our Budget, we will address these issues. Since we are currently trapped in a debt crisis, our main goal is to minimise borrowing, attract more foreign investment, and increase remittances from Sri Lankan workers abroad by developing the tourism industry. Although we cannot immediately exit the IMF agreement, we will engage in further discussions with them.
On tax policies and new revenue
People may wonder how we plan to raise salaries, pensions, and relief funds. Tax collection needs to be more systematic.
Significant amounts of untaxed revenue are currently being overlooked. Moreover, we can save a substantial amount of money by curbing corruption, waste, and unnecessary expenses.
We are also committed to abolishing the pensions for Members of Parliament, which will help generate new revenue.
By offering special incentives to local and foreign businesses and industrialists, increasing production, and moving towards a production-based economy, we can generate the funds needed to raise salaries and provide relief.
We won’t implement a Budget based on hand-to-mouth tactics– People’s Power Alliance Presidential candidate Dilith Jayaweera
On Budget policies
In the plans we’ve presented, strategic approaches stand out. If we are to present a Budget in the future, it must align with these strategic plans; nothing should be done outside of them. Until now, the Budgets in this country have been presented based on short-term approaches with no proper planning or vision for the future. These Budgets were presented without a clear understanding of the impact on all sectors and institutions of the country.
However, a strategic, well-thought-out plan is essential. If we continue creating Budgets like before, the country will continue descending into further economic instability. At this rate, we won’t be able to repay our debts, and we’ll find ourselves trapped in even deeper financial difficulties.
On addressing the Budget deficit
We believe that addressing the Budget deficit requires operating with an entrepreneurial mindset within the Government. Without creative solutions, we won’t be able to lift the country out of the current economic pit. While agreements with the International Monetary Fund can help repay debts, we must find mechanisms to generate quick financial returns. There are short-term solutions available to us.
We must identify businesses that can bring in more foreign exchange and manage consumption patterns that do not hinder public well-being while reducing expenses.
Simply borrowing more to repay old loans is not a sustainable solution. The country should repay its debts through income-generating mechanisms.
You can’t manage a country’s economy like a small shop – Democratic Left Front (DLF) Presidential candidate Dr. Wijeyadasa Rajapakshe
On Budget policy
No one has adequately analysed the upcoming Budget yet. Temporary measures will be necessary to address the Budget deficit, but a proper financial policy is essential to lift the country out of the current abyss. The current agricultural, industrial, and economic policies need to be fundamentally changed if the country is to recover.
This cannot be done overnight; the financial policy must be entirely revamped. The current situation arose due to mismanagement of foreign exchanges, which I have highlighted in Parliament with detailed calculations. However, these issues have yet to be debated. The country has lost significant foreign exchange since 2006 because the foreign exchange control laws were not properly enforced. Therefore, the first step is to develop a proper mechanism to bring in foreign exchange.
On tax policy
Our banking system is entirely corrupt. Due to the lack of a fair system for entrepreneurs, about 22 percent of businesses have collapsed in recent years. Industries have shut down. Agriculture’s contribution to the Gross Domestic Product (GDP) is only 8 percent, compared to 18 percent in India. Our industrial sector stands at 32 percent, but our service sector has been overly expanded, making the economy highly vulnerable to minor disruptions.
Both short-term and long-term plans are needed. It’s unrealistic to claim that these issues can be resolved in two months, regardless of who comes to power. Next year, the current tax rates will likely remain the same. Although this may increase tax revenue in the short term, it will lead to the collapse of businesses in the long term, eventually eroding the tax base as well.
Therefore, we need a fair tax policy. The country needs a 10-year tax policy framework. At the very least, people should know how the next five years will be managed long before those years begin. Managing the country’s economy like a small shop will only lead to disaster for the people.
We will act decisively to reduce the cost of living-SLPP MP Sanjeewa Edirimanna
On Public sector salaries and pensions
Increasing the salaries of public servants alone will not reduce the cost of living. Public servants number around 1.5 million, covering about 1.2 million families.
However, there are approximately 6.1 million families in Sri Lanka. Therefore, our policy is to create an economy that can provide essential goods and services at affordable prices.
The Government must intervene justly in matters related to the cost of living, and we will fully utilise the avenues available for such interventions.
Both the private sector and cooperative services should be involved in this process. Moreover, some vulnerable communities cannot sustain themselves under the current market system without external support.
This includes a wide range of people, from those with special needs and the elderly to those suffering from chronic illnesses. As a Government, we are committed to protecting these individuals not for electoral gains but out of a sense of duty.
On Budget policy
At this point, every candidate prioritises their policy statement, and we in the SLPP are no different. Our Budget is based on the policy framework set out in our presidential campaign.
On the IMF
We will continue with the program agreed upon with the IMF. The agreement is not merely between a Government and the IMF; it is an agreement between the Sri Lankan State and the IMF.
It is an agreement made on behalf of the Republic of Sri Lanka.
However, there is room to renegotiate and implement the program more effectively under a new Government, and we are prepared to initiate a new dialogue on this matter.
On tax policy
The previous Government introduced significant tax cuts, which drew public criticism.
The tax increase sparked considerable backlash after the current President took office. To address the current Budget deficit, the first step should be ensuring that those identified as liable for taxes are actually paying them.
The Government must focus on collecting due taxes from those evading payments. Many institutions and individuals who should be paying taxes are not yet documented as taxpayers.
Secondly, the number of taxpayers should be fairly expanded.
Thirdly, a new segment of potential taxpayers should be developed. We can strengthen the economy by broadening the tax base and supporting entrepreneurship, innovation, and new business ventures. Although this may seem complex, it is the correct approach to increasing Government revenue.
