In a significant parliamentary development, Mahinda Yapa Abeywardana, Speaker of Parliament, officially endorsed the certificates on the Appropriation Bill for the year 2024, the Value Added Tax (Amendment), and Finance Bills, all of which received approval in Parliament.
The formulation and presentation of the national budget for the upcoming fiscal year took place against the backdrop of a severe economic downturn, marking the most substantial economic challenge in our nation’s recorded history.
The budget for the fiscal year 2024 includes notable increases in funding allocations for various sectors, encompassing government employee salaries, retirement benefits, poverty relief programs such as Aswasuma, education, healthcare, and road infrastructure development.
Government employees are set to receive a significant boost with a 10,000 rupee increase in their living allowance, effective January 1st, 2024. Although the policy comes into effect in January, the disbursement of the adjusted amount is scheduled to commence in April. Arrears accrued from January to April will be disbursed to government employees in installments starting from October of the following year.
It is crucial to note that our nation currently operates under a program linked to the International Monetary Fund’s credit facility, necessitating strict adherence to robust economic policies.
While the proposed budget encompasses a range of expenditure initiatives, the primary challenge lies in ensuring sufficient state revenue, as underscored in the International Monetary Fund’s staff report dated December 12th, accompanying the second tranche disbursement.
“Even with revenue measures adopted so far, government revenue remains substantially lower than in other emerging market and middle-income countries.”
The government’s key proposal for revenue generation revolves around an increase in the Value Added Tax (VAT) rate, escalating from 15% to 18%, effective January 1st. Furthermore, nearly 100 previously exempt goods and services will be brought under the VAT umbrella.
