Sri Lanka’s Prime Minister and Finance Minister Mahinda Rajapaksa will present a budget for 2021 amid weak revenues from a 2019 tax cut, a Coronavirus pandemic and which has led to record money printing and credit downgrades.
The administration is seeking authority to spend 2,687 billion rupees under the law.
In an Appropriation Bill already tabled in parliament, called the first reading of the budget, allocations of current expenses of 1,714 billion rupees and 963 billion in capital expenditure has been allocated to ministries.
Sri Lanka is seeking authority to raise 2,900 billion rupees of debt.
The Department of Treasury operations, which issues and rolls over debt has been allocated 2,192 billion rupees including 940 million rupees in current spending.
Finance Minister Rajapaksa presenting the budget speech in the so-called second reading will move changes and also present proposals to bridge the deficit, between revenues and expenditure.
In 2020, revenues are estimated to fall to 1,580 billion rupees from 1,983 billion in 2019, after value-added and other taxes were cut in December 2019 as part of a ‘stimulus’ and Coronavirus hit the economy.
Revenues were also hit in 2020 as imports were controlled when the rupee fell sharply amid money printing in March and April amid a ‘flexible’ exchange rate.
Up to November 2020 around 450 billion rupees of central bank financing has been made, which include foreign reserve losses to pay debt.
The budget and its proposals will be debated from November 18 to 21, where a vote will be taken. The committee stage changes will be done between November 23 and December 10. (Colombo/Nov17/2020)