Sri Lanka - Budget – 2017

Budget Speech – Accelerating Growth with Social Inclusion

Background :

Honorable Speaker, I was privileged to present the maiden Budget of the government of consensus in 2015. To resurrect and invigorate the economy we proposed a set of proposals with an emphasis on improving the economy in general and the fiscal sector in particular. The government accorded priority in 2016 to increase the local and foreign investment paving the way for ensuring massive development projects in the country.

Relief measures introduced including reduced prices of essential food items and Petroleum and LP gas prices in line with declining global prices have no doubt been instrumental in generating a substantial amount as savings for people to meet their other needs.

We must progress based on our achievements strengthening the process in a sustainable manner. We will aspire to foster a knowledge based social market economy duly built on the principles of social justice. Sri Lanka is at present at crossroads, and the 2017 budget presented today will have a critical aspersion on the future of our country. The aspirations of the people for greater employment opportunities as well as entrepreneurial alternatives are expanding, meeting of which demands among others a lot of changes and reforms in all spheres of economic activity.

In order to relieve ourselves from the legacy created by the previous regime, we need to introduce reforms in many spheres of the economy. The resurrection of the mostly defunct State Owned Business Enterprises (SOBEs) and international trade related reforms are of prime importance as the mechanics of the previous regime had damaged the very existence of many institutions adversely affecting the business environment. Such endeavors along with the establishment of a strong policy framework to ably assist the improved economic management will be in complete contrast to the irregularities committed by the last government.

Honorable Speaker, I do not have to elaborate on the dire straits many SOBEs are in at present. The accumulated losses and sub optimal performance over several decades clearly depict the mismanagement which is literally draining the Treasury. As such comprehensive reform programs will be required to revamp such enterprises and to transform them into viable ventures.

Export development will be a top priority and a conducive environment will be created for investments catering to export development. A gradual erosion of exports relative to GDP from more than 30percent in the mid-1990s to around 15percent at present does not augur well for the economy. In this context trade and investment based reforms encompassing measures aimed at productivity improvement, trade facilitation, bilateral economic integration agreements, restructuring of the BOI, and creation of much needed institutions and elimination of exchange controls will certainly auger well for an improved international trade and investment regime. We will focus on fair trade and not necessarily free trade thus creating non debt creating foreign fund flows.

However, we need to improve our competitive edge of our economy through developments of the processes, skills and productivity. To accelerate and sustain growth, boosting productivity is an imperative. We have identified productivity enhancement, investments in ICT and infrastructure development as being integral requirements for the economic growth envisaged. We must keep abreast with technological advancements globally such as automation, robotics and ICT. Increased investments in Education, Research and Development and Digital infrastructure will enable us to seize new opportunities.

Sri Lanka is an island nation, and as such the maximum utilization of a plethora of economic benefits based on resources emanating from the ocean will be fully exploited. Our focused attention will be drawn to ocean research, tourism, fisheries and marine resources creating a gamut of economic prospects.