Sri Lanka’s public debt, which was 70 percent in 2014, has increased to 85 percent by 2019, Prime Minister Mahinda Rajapaksa said. 

The Prime Minister, acting as the Minister of Finance, mentioned this presenting the second reading of the Appropriation Bill for the year 2020 at the parliament today (12).

He pointed out that the relevant Appropriation Act includes 4 Votes on Accounts.

According to the Appropriation Act 2020, the budget deficit is 7.9 percent of Gross Domestic Product (GDP).

The Premier pointed out that Sri Lanka’s budget deficit for the year 2019 was 9.6 percent of GDP, increasing from 5.7 percent in 2014.

In his speech, PM Rajapaksa informed the House that Sri Lanka has now settled all debt obligations including the foreign currency debt dues for the year 2020.

“We were able to maintain this unblemished record of ours, only because we took 6 immediate actions to reduce unwanted foreign borrowings and made substantial effort to manage imports at an acceptable level, as we had a clear understanding that the debt phobia is being propagated simply as a strategy to justify the sale of assets of the country and the neoliberal policies of the last government.”

The Premier, citing the World Economic Outlook recently published by the International Monetary Fund (IMF) stated that it has been forecasted that Sri Lanka is expected to record negative growth of 4.3 percent due to the COVID-19 pandemic while India, the largest economy in our region, is expected to record a 10.3 percent contraction of their economy.

Speaking on the pandemic situation, the PM said that the government has currently spent nearly Rs. 70,000 million for the identification of patients, quarantining activities, random testing, and related welfare activities.

With the capacity increased to an average of 7,500-10,000 tests per day, each costing nearly Rs 6,000, the daily expenditure for PCR testing exceeds Rs 50 million, he added.

Further, Rajapaksa said that Sri Lanka went from recording an average annual growth of 6 percent per annum to recording a steady decline of growth to 2.3 percent in 2019. It was the lowest growth rate recorded in the South Asian region, he added.

He added that the government has now reduced Value Added Tax (VAT) and Nation Building Tax (NBT) from 17 to 8 percent and increased the applicable turnover threshold for VAT to Rs.25 million per month while it was Rs 1 million per month previously.

In addition, several expenditure heads included in the Appropriation Bill will be amended, stated the Minister of Finance PM Rajapaksa.

It has been proposed to increase the borrowing limit stated in 9 the Appropriation Bill by Rs 180 billion and to amend the guarantee limit to 15 percent as stated in the Fiscal Management (Responsibility) Act.

The complete speech made by Prime Minister Rajapaksa:

Second Reading of 2020 Appr... by Ada Derana