Targets US$ 5,000 Per Capita Income:
Economic growth rate to 6% by 2020:
Budget deficit to reduce upto 3.5% of GDP by 2020:
FDI inflows of US$ 5 billion:
Finance and Mass Media Minister Mangala Samaraweera presenting his maiden budget for 2018 envisions to increase the economic growth rate to 6 percent by 2020 from the current 4.5 percent.
Economic analysts viewed this budget as one that would introduce far reaching reforms since 1978, to make the economy more competitive.
The fourth budget proposals of the Unity Government under the theme ‘Blue Green Budget’ for the fiscal year 2018 will support the achievement of envisaged medium-term targets such as Per Capita Income of USD 5,000, one million new jobs, FDI inflows of USD 5 billion, and doubling exports to USD 20 billion.
“In 2018, we envisage a GDP growth of 5 percent, inflation of around 6 percent, and we hope to achieve for the first time in almost 6 decades, primary surplus of 1 percent of GDP and a Budget deficit of 4.5 percent of GDP.
Minister Samaraweera stated that the overall, the economy is expected to grow by around 4.5 percent in 2017 and projected to move gradually to a higher GDP growth path of around 6 percent by 2020, while containing the level of unemployment at around 4 percent level.
He further said, “We are in the process of effecting revenue reforms in all areas including Inland Revenue, Customs, Excise and others to raise Government revenue closer to 20 percent of GDP over the medium-term. As revenue increases, and expenditure remains well targeted and rationalized, overall budget deficit is expected to reduce up to 3.5 percent of GDP by 2020.”
Minister Samaraweera stated that the government will introduce the Enterprise Sri Lanka Credit Scheme with the objective of encouraging the SME sector to strengthen Entrepreneurs. He added that during 2018-2020, the government will support the formation of 50 agro and fishery companies, 25 majority women owned companies, and 150 youth centric startups. These companies will have at least 10 equity shareholders and each shareholder will have invested at least Rs. 10,000.
He said that in order to encourage women entrepreneurs, the “Enterprise Sri Lanka Credit Scheme” will make available credit facilities with the interest subsidy being at least 10 percent more for women entrepreneurs relative to others.
The Finance Minister said that through the Budget 2018, Rs. 2,000 million has been allocated to further strengthen the skills development programmes undertaken by the National Youth Corps.”We propose to implement a programme where youth groups will undergo 3 to 6 month training courses in a specific skill as demanded by the private sector. We will establish the “Employment Preparation Fund” at the Ministry of National Policies and Economic Affairs with an allocation of Rs. 2,500 million.”
With the aim of promoting direct foreign investments and simplifying business registration, a One Stop Shop for business registration through a single identification system and introducing of a system to scan and digitize company records, create a database of trademarks, using Department of the Registrar of Companies’ funds was also proposed.
Focusing on debt repayment, Samaraweera said the next three years would be crucial with debt repayments amounting to almost Rs.7,000 billion.
“This includes the repayment of international sovereign bonds which will mature every year amounting to almost Rs. 600 billion where bunching is a severe strain on the Government finances. In 2018 alone, the debt repayment amounts to Rs. 1970 billion. As was the case in the last two years, the government did not compromise on the investments to be made in 2018, in spite of the impending debt burden.”
With regard to Customs, Excise and Inland Revenue Dept’s will be restructured and strengthened by way of introducing new ordinances for better revenue collection.
With the aim of fostering reconciliation, a large number of proposals have been made including the construction of 50,000 brick and mortar houses for the North and East and introducing irrigation systems and construction of a home for differently abled women in the North, introduction of low interest loans and provision of a stable livelihood for 12,600 rehabilitated ex-combatants. Further an economic centre will be established in Jaffna, Dambulla and Colombo creating an economic triangle.
In addition, Rs. 2500 million will be allocated to provide housing and infrastructure for the Muslims who were forcibly evicted from the North by the LTTE in the early 1990s.
Minister Samaraweera in conclusion said the country is at the crossroads of history and the choice whether we are to walk forward, united in our diversity to a new age of freedom and prosperity or go back to the darkness of a bygone era is a choice which is ours to make.