-Colombo, December 10, 2023-
Sri Lanka’s much-anticipated 2024 budget, once heralded as beacon of economic revitalization, has instead become a source of concern, unraveling a perilous path for the nation. This analysis delves into the critical aspects of the budget, shedding light on its potential implications for the people and the economy.
Taxation Turmoil: Burdening the Masses, Enriching the Few
At the heart of the budgetary concerns lies a significant proposal—a whopping 47% increase in tax revenue, amounting to RS. 4.13 trillion. This surge primarily stems from a projected 62% increase in inflationary indirect taxes on goods and services. The consequence? A disproportionate impact on the common citizen, as essentials like fuel and electricity become more expensive. The budget, in essence, appears to favor wealthy owners of government debt, creating a reverse Robin Hood scenario.
Education Erosion and Neoliberal Nightmares
In the wake of economic promises, the budget makes distressing trade-offs. Essential sectors like education face the brunt of expenditure slashes, while funds are diverted towards seemingly unproductive road projects. The introduction of 60 new laws further deepens concerns, as it signifies a fundamental shift towards a neoliberal agenda. With approximately 55.7% of Sri Lankans already classified as multidimensionally vulnerable, the consequences of these decisions on health, education, living standards, and personal security are dire.
IMF’s Oversight: Ignoring Recommendations at What Cost?
The decision to raise the government debt ceiling to RS. 7.35 trillion, a staggering 78% higher than expected revenue, raises concerns about the government’s alignment with public mandate. This pursuit of debt seems to prioritize the privileged class and foreign creditors, potentially leading to a surge in domestic interest rates. The 2024 budget underscores a disconcerting lack of accountability and responsiveness to the broader public.
Interest Payments Soar: A Stranglehold on the Economy
In a startling revelation, the budget showcases a 25% increase in interest payments, reaching Rs. 2.7 trillion. This surpasses the budget deficit, excluding bank recapitalization expenses. The brunt of this burden falls on the common citizen, as domestic rentiers benefit disproportionately. Sri Lanka’s dubious distinction of allocating 77% of government revenue to interest payments in 2023 raises questions about the sustainability of such a fiscal approach.
Debt Dilemma: Prioritizing Elites Over Public Mandate
The decision to raise the government debt ceiling to Rs. 7.35 trillion, a staggering 78% higher than expected revenue, raises concerns about the government’s alignment with public mandate. This pursuit of debt seems to prioritize the privileged class and foreign creditors, potentially leading to a surge in domestic interest rates. The 2024 budget underscores a disconcerting lack of accountability and responsiveness to the broader public.
Unemployment Alarms: SME Closures and Taxation Tensions
Acknowledging the closure of SMEs, the budget reveals a potential 10% island-wide unemployment rate. Proposed tax measures, including the extension of VAT, compound this issue, exacerbating the economic collapse. The shift towards indirect taxes raises concerns about the impact on the foreign debt crisis and the looming threat of a second debt default.
Energy Inequality: Citizens Subsidizing External Interests
Sri Lanka’s energy landscape reflects a stark imbalance between citizen needs and external creditor demands. Approximately 10% of households face darkness due to high electricity tariffs, demanded explicitly by the IMF. This subsidizes businesses, including non-tradable sectors and tourist-oriented hotels, further straining the general population.
A Call for Economic Renewal: State-Regulated Industrialization
In conclusion, Sri Lanka’s economic revival necessitates a fundamental shift towards state-regulated industrialization. The public’s demand for the resignation of the unmandated Ranil-Rajapaksa regime echoes a call for fresh elections, aiming to safeguard democracy and public interest. It is imperative to break free from the clutches of debt and build an inclusive economy where prosperity is shared—a vision that transcends the divisive impacts outlined in the 2024 budget.
Shantha Jayarathne
