- No deviation from macro-economic framework
- Aims at achieving fiscal targets within a short period
- Zero tolerance for corruption
The 2025 Budget is a clear indication that the change of administration has not led to a deviation from the macro-economic framework under the Extended Fund Facility (EFF) program of the International Monetary Fund (IMF) and that it is moving in the right direction from recovery to economic growth.
The financial statement is also consequential as it refuted the perception that a change of Government results in a reversal of economic gains made so far.
The market-oriented and business-friendly Budget is also a rebuttal to the misperceptions from the outside world that expected a shift from a free-market economy to a controlled economy.
Some economists and financial analysts even went to the extent of saying that they did not see any distortions in the Budget.
Former Director of the Colombo Stock Exchange and current CEO of JB’s Securities and Chairperson of Advocata Institute, Murtaza Jafferjee said the Budget 2025 was a policy- oriented Budget with a direction towards fast-tracking economic growth.
However, he said all the good things in it have to be executed by capable people.
The 2025 Budget aims at a five percent economic growth this year by increasing revenue to 15%, trimming its deficit to 5.2 % and achieving a primary surplus of 2.3 % of the GDP.
Central Bank Governor Dr. Nandalal Weerasinghe said there is fiscal and monetary policy coordination in the Budget and added that the revenue targets could be reached due to prudent fiscal and monetary policy in the financial statement.
The total Government expenditure for 2025 is projected to reach Rs.4,218 billion, marking a Rs.358 million increase from Rs.3,860 billion recorded in 2024.
Secretary to the Treasury/Ministry of Finance, Planning and Economic Development, Mahinda Siriwardena said he was confident the Government will achieve the revenue targets for 2025 as it’s focused on gaining maximum income from taxes through efficient tax administration and monitoring.
Budget analysts also said most of the initiatives in the Budget were good but added that there was the need to implement the initiatives.
According to a Think Tank budget anaylsis, only 16 percent of the proposals in the 2023 Budget were fully implemented.
Be that as it may, the emphasis in the 2025 Budget to boost exports was hailed by analysts while adding the need to take a cue from Vietnam whose export sector has grown by leaps and bounds due to a diversified export basket that it offers to the world.
“Sri Lanka needs to look at Vietnam which has a vibrant export sector,” Jafferjee said.
Principal of the Tax and Regulatory Division of KPMG, Suresh Perera said there has been a scientific approach introduced to taxation in the country in the Budget.
Perera underscored the importance of a tax policy unit at the Finance Ministry adding that the absence of such a unit was the root cause of many errors in taxation in the past.
Former Deputy Governor of the Central Bank W.A. Wijewardena said the Budget has conformed to the parameters specified by the IMF under the EFF program and those statutory requirements laid down under the Economic Transformation Act. “If the Government is able to maintain the levels at ground level, it could draw the remaining tranches of EFF,” he said. However, he said that current expenditure seems to have been upped to maintain essential Government services; but capital expenditure has been cut to 4% of the GDP from the historical average of 5%.
Laugfs Holdings Ltd. Chairman W.K.H.Wegapitiya said the 2025 Budget was a positive Budget when we compare where we are now as a nation.
“I welcome the Budget for 2025 for the measures taken to reinvigorate the economy, especially through the development of digital infrastructure for which Rs. 3000 million has been allocated.
This will open new avenues for innovation and global competitiveness,” he said, adding that incentives for SMEs will empower local businesses to scale up operations.
Wegapitiya said the Private Public Partnership framework must be commended. However, he said there has to be greater transparency and frequent dialogue between the Government and the private sector which has been lacking in the past.
“The efforts taken to develop the Colombo Port must be welcomed. Increasing public sector wages which will boost the spending power of consumers could trigger inflation,” he added.
Founder President of the Institute of Certified Management Accountants of Sri Lanka (CMA), Prof. Lakshman R. Watawala said that the country needs to thank the IMF for bringing in discipline to fiscal management policies of the Government without which. Achieving economic goals would not be possible.
Addressing a post budget forum organised by CMA on Wednesday, he said cost reporting which is absent in many business organisations in the public and private sector was crucial for transparency and accountability of their operations.
International trade specialist and Founder of the Shippers’ Academy Colombo and CEO, Rohan Masakorala said that he did not see or hear anything about liberalisation of the ports and shipping sector in the Budget which he said was very disappointing.
“Liberalisation of ports and shipping had already taken place in many countries, long before Sri Lanka which is now lagging behind many regional ports such as India, Pakistan and Bangladesh that are getting ahead of us,” Masakorala said. A spokesman for the Local Tile and Bathware Association said that the Association has called for urgent action to safeguard the future of domestic manufacturing, ensure fair market conditions and protect the country’s economic interests.
“The Association is not against imports but against unethical practices that deprive the nation of significant tax revenue and undermine quality and competition,” he said.
The Chief Executive Officer (CEO) of Kelani Cables, Dr. Anil Munasinghe said the company will extend its fullest support to the initiatives undertaken by the Government under the 2025 Budget.
“Only if everyone supports to develop the economy that business institutions will flourish. The trust placed by the international community and the investors must be maintained to develop the economy. We believe the new regime will maintain that trust,” he said adding that achieving US$ 19 billion from exports will not be an uphill task if the private sector receives the support of the Government.
The Ceylon Chamber of Commerce welcomed the bold proposals in the Budget which has focused on stability, governance, public relief, tackling corruption and driving inclusive growth. The Budget emphasises infrastructure expansion through Public-Private Partnerships and digital economy initiatives, providing a strong foundation for transformation.
However, all eyes will continue to be on how the Government would meet its revenue targets under the fiscal consolidation plan in 2025.
The approval of the fourth tranche of about $333 million under the EFF program of the IMF is contingent on the Budget. Business leaders reiterated the need for consistency in policy for the recovery and growth of the economy which plunged to its worst crisis in 2022 sending inflation soaring, its currency into freefall, and forcing a default on $25 billion of debt.
The taxes aimed at bolstering revenue to the State coffers which the Government intends using for productive ventures were commended at post Budget forums last week.
Vehicle importers said the many taxes on imports will drive prices up creating less demand of personal use vehicles.
Tax experts warned that the imposition of the value added tax on top of an already VAT-inclusive excise duty has resulted in a ‘tax on tax’ scenario, makes the system unfair and unnecessarily burdensome.
They said imposing taxes was one thing but administering them was also important to increase public revenue to 15.1% of the GDP this year.
Budget analysts said that it was crucial that the Government executes the tax proposals, if it is to achieve the targets for 2025 within a span of eight to nine months before the next Budget is presented.
The 79th Budget which is the first of the NPP Government was presented by President Anura Kumara Dissanayake last week.
The vote on the second reading of the Appropriation Bill is scheduled to be held on February 25.
