BUDGET SPEECH – 2016
1. Honourable Speaker, as the 20th Finance Minister of the Democratic Socialist Republic of Sri Lanka it is not only a pleasure but also a privilege to present the 70th budget of the country for the year 2016. The effervescent leadership and guidance of His Excellency the President Maithripala Sirisena and the Prime Minister Honourable Ranil Wickramasinghe have provided the ideal formula to generate a budget seeking excellence in all fronts. The 2016 budget will go into the annals of history as the most significant budget ever to be presented as I represent a national government of consensus united to create a new economic and social order for the benefit of all Sri Lankans, akin to the first government of independent Sri Lanka which was truly a national government.
2. The statement made on 29th January 2015 on interim budget proposals termed as “Hundred Day Revolution” ensured that a majority of people of Sri Lanka who had undergone tremendous difficulties and hardships could finally seek economic freedom. I do not wish to dwell on the positives of the interim budget previously presented and look forward to delivering further dividends through the adoption of prudent and cohesive economic policies benefitting the nation.
3. Honourable Speaker, it is necessary to salute the people of Sri Lanka who stood up for their rights and delivered the verdict through the most democratic election to ensure the ascend of Honourable Maithripala Sirisena to be the President of Sri Lanka. We could remember the unceasing waves of economic rhetoric which filled our ears during the budget presentations of the last regime, devoid of benefits to suffering masses. Honourable Speaker and Honourable Prime Minister, the Presidential elections held on 8th January 2015 could be termed as a turning point of the nation, a nation with a heritage and culture dating back to over 2,500 years. The people of Sri Lanka once again endorsed their verdict by granting an opportunity to form a national government of consensus devoid of petty differences and a positive outlook in August 2015, once more through a most democratic election. The dynamics of dedicated leadership based on consensual politics and commitment to an unwavering policy, the domineering hallmarks of the Prime Minister Honourable Ranil Wickramesinghe paved the way for back to back democratic victories for people of Sri Lanka.
4. During the short span of ten months, the transformation of the social, economic and political spheres in Sri Lanka could be termed as phenomenal. The derogatory “hubs of crony capitalism” had disintegrated forever, the fearsome “White van syndrome” had been extinguished and the “most detestable family bandyism” eradicated. Today, the average people of Sri Lanka are enjoying not only the fruits of economic dividends but also democratic freedom which was under a cloud during the last regime. The ten month period was a most difficult phase to traverse, from a governing view point. A crises ridden economy, differences rife, a minority government ruling the country. But the achievements were significant and new milestones reached paving the way for a new Sri Lanka.
5. Lord Acton’s famous and mesmerizing words “Power corrupts. Absolute power corrupts absolutely” reverberate when we reminisce of the misdeeds of a regime which created almost a ‘Banana republic’ in Sri Lanka shunned by many nations. We lost our dignity as a nation and facing other issues of concern too such as the termination of concessions under GSP plus facility and also the ban on fish exports to the European Union (EU). When democracy prevails, the responses are of a benign nature which was felt whenever foreign countries were visited during recent months.
6. What we inherited in January 2015 was “a near crisis legacy”. The crisis was not restricted merely to the economy but extended to foreign, welfare, governance, law and order policy issues and if it were to continue would have resulted in far reaching consequences to the nation and future generations too. We have confronted the crisis situation with utmost dexterity and I am sure would be able to face up to the herculean task with courage and confidence. Honourable Speaker, the track record established during the “Hundred Day Revolution” depicts the manner in which crisis could be diffused and negative situations could be turned into positive.
7. Economic policies of the last regime were fundamentally flawed. Mounting debt was about to take control of the economy. Fiscal revenue as a percentage of GDP had fallen by about half in comparison to 1990, unproductive investments riddled the public finance structure, with inefficient state owned enterprises, corrupt procurement processes and unsolicited foreign borrowings and grant of contracts made mockery of good governance and transparency. When an economy is misguided and mishandled, the future of a country would be in perilous jeopardy and Sri Lanka did enter that deadly zone due to flawed economic policies of the last regime.
8. The foreign policy of Sri Lanka was blemished and we were on the brink of receiving stringent economic sanctions and almost left to fend for ourselves with limited assistance from previously supportive nations. Government policy was hazardous to the effect that the levels of waste and corruption reached hither to be unheard of proportions and the negative options were practiced with utmost impunity. Anti poverty programs were politically motivated and did not reach the needy and suffering masses. Law and order of the country was turning medieval and the country was gradually converting to a feudal entity.
The Rajapaksa regime was committed to ending the strife and eradication of terrorism. And they did succeed to rid mother Lanka of feared terrorism and they should be complemented for doing so with the gallant forces leading the way. However, the key turnaround factor should not be forgotten. At the end of 2001, the country was almost falling apart with a negative growth rate, continuous escalation of violence and key economic targets attacked.
Consensual policies of Honorable Ranil Wickremasinghe administration halted this slide so that not only the economy turned around but our gallant forces also could replenish much needed arms, equipment and ammunition and most importantly recover lost morale. We should remember the words of the prophecy quoted by late Honourable J R Jayawardena at San Francisco from the Dhamma Pada that “hatred should not be ceased by hatred but only with kindness” . Although the war was won a lot was left to be done to with the heart and minds of all communities and religious sects in Sri Lanka. It is the objective of our government to ensure but our late leader so categorically presented is practiced in no uncertain terms.
9. We have restored not only democracy but brought in a new dimension of freedom devoid of fear and injustice. Policies have been revamped. Nineteenth amendment has restored major provisions of the repealed Seventeenth amendment and the Constitutional Council is very much in existence with independent commissions as well. We look forward to the goodness of the “Yaha Palanaya” or good governance cascading to all strata of the society and are committed to do so.
10. We have a dream to be another rainbow nation, a developed nation. A nation with an upbeat happiness index, a nation of prosperity, cascading with goodness and goodwill. We need to provide economic freedom for our future generations to enjoy the fruits of our commitment. We will ensure delivery of targets and goals set focusing on short, medium and long term strategies and confront structural development challenges to facilitate transition towards an upper middle income economy. We are not looking forward to providing a platform for few millionaires only but endeavor to pave the way for millions of millionaires to come into existence.
11. It is in this context that on 5th November 2015, Honourable Prime Minister delivered a policy statement to this august body which enumerated the platform for the budget 2016. The medium term strategies proposed consisted of the under mentioned.
a) Generating of one million employment opportunities
b) Enhancing income levels
c) Development of rural economies
d) Ensuring land ownership to rural and estate sectors, the middle class and government employees
e) Creating a wide and a strong middle class
12. Honorable Speaker, the said policy statement is significant and it is the basis for this budget. The statement contains broad policies of national importance that will have far reaching positive implications to the Sri Lankan economy. It categorically points out that to achieve our economic and development goals, we need to establish the economic foundation correctly. Only with a strong foundation we can perform and achieve set goals and targets. That’s why the policy statement particularly highlights the need to make fundamental changes in the economic perspectives to focus on the journey forward.
13. Hence, our government’s policy would concentrate on removing the barriers that have resulted in the market not operating freely. The reform measures in the policy statement will be the key in this context. The proposed reforms will not only nurture but also foster private sector economic activities and ensure their positive role in the entire economic process.
14. Our policies will be implemented through reforms, particularly with reference to the state owned enterprises and international trade, which had been neglected without direction for many years. Reforms are also needed to come out from the legacy created by the previous regime, which had affected adversely, in particular the business environment of the country. Adherence to the policy will activate the process to move away from the erratic economic policies and irregular practices in economic management witnessed during the previous Rajapaksa regime.
15. With the reforms, we need to improve local competitiveness, international trade and investments as well as skills and productivity of our people while being conscious about the developments in the global economy. At the same time, we must foster a knowledge based Social Market Economy built on social justice principles.
16. We plan to put in place mechanisms that will seek not only to strengthen the economic sphere but also many other sectors such as the political, social, education and health. We are concerned about the fundamental requirements like land, housing, education and health of the people. That is why Honorable Prime Minister has made on 5th November 2015 a series of proposals in the statement which are related to these areas as well.
17. We will have to continue to focus on agriculture, the prime enterprise of our nation. Our economy over the years had been based on agriculture. Our nation is a blessed nation. We have President who takes pride in stating that he represents the farming community. His Excellency the President Maithripala Sirisena’s mission on agriculture will ensure that we would not only achieve food security but also commence agricultural exports. Reminiscent of the golden era when Sri Lanka was called the “Granary of the East” our President’s omnipresent commitment to uplift the agriculture economy is poised to reap just dividends.
18. It may be prudent to dissect the economic policies adopted by previous regimes since independence. The positive and negative aspects which had resulted in the current situation could be disseminated based on the factual presentation.
THE BACKGROUND FOR BUDGET 2016
19. Honourable Speaker, I would like to draw your attention to the context in which this budget is presented. We had gone through different phases in economic policy adopted during the past which see-sawed from forms of capitalism, socialism and welfare economic objectives, from the time we gained independence in 1948.
Since Independence to 1977
20. When Sri Lanka gained independence from the British in 1948 the transition was so smooth that one of our great historians Prof. K.M. De Silva termed our country as “an oasis of stability, peace and order”. However, many other such transitions upon the ending of the 2nd World War, of other countries were critically marred by violence and turmoil.
21. Rt. Honourable D.S. Senanayake, the father of the nation, managed to secure the support of the Sinhala Maha Sabha and the Tamil Congress and also the support of Muslims, Tamils, Burgers and Malays and in short all nationalities to form a unity government. That was the only occasion until the present day where a government united to serve the nation had been formed. Sri Lankan economy was an agricultural economy producing Tea, Rubber and Coconut as the main agricultural products and major exports as well. The dualistic economy also managed to produce food crops to adequately sustain the requirements of the nation. A per capita income of around US$ 120 and an economy of around US$ one billion were vital economic statistics of that era.
22. During this period, the economic regulations were less, making it a free market economy, but exposure to international trade and low level of exports and continued focus on welfare measures made the economy vulnerable. Politically motivated welfare measures negatively reflected on the achievement of economic prosperity and nationalistic issues resulting in unplanned nationalization of resources added to the mounting economic turmoil.
23. The beginning of the seventies brought in era of a closed economy, controls and rationing. The people who managed to survive the period of restricted commodity access will remember the era of “Haal Polu” (where carrying of rice over a given quantity was restricted) and “Paan Polim” (where bread was rationed and issued on a card). Other restrictions on clothing and other basic needs were also imposed making it difficult for the people to at least enjoy economic freedom. The era was signified by the restriction on movement of selected commodities and the restrictive era ended with the period of reforms based on “Open economic principles” commencing 1977, under the outstanding leadership of the Late His Excellency J.R. Jayawardena, the first Executive President of the Democratic Socialist Republic of Sri Lanka.
24. By 1977, the economy was still of a minor value of US$ 4.1 billion and a per capita income of US$ 294, an increase of a mere US$ 174 over a period of thirty years.
1977: New Thinking
25. A policy revolution followed with the resounding victory of the UNP in 1977 and the economy was opened almost overnight, the first country in South Asia to do so. The liberalized economic outlook opened doors for foreign investors to invest in productive ventures, socialist controls were lifted and Sri Lanka shifted from inward economic orientation to reach new heights in economic growth.
26. Phasing out of import controls, freeing of credit markets, introduction of unified exchange rate systems, with drawl of state trading monopolies, ending of price controls as well as privatization of state owned enterprises were dynamic reforms introduced. The private sector was invited to be the “Engine of Growth” whilst the phrase that a “government has no business to do business” ideally suited the new economic process.
27. Late His Excellency J. R. Jayawardena’s cabinet consisted of many political icons such as the Late His Excellency Ranasinghe Premadasa, Late Honourable Lalith Athulathmudali my own mentor and Guru, Late Honourable Gamini Dissanayake and Honourable Ronnie De Mel and of course the emerging political star of the seventies, the present Prime Minister Honourable Ranil Wickramasinghe. They ensured that the economy reached hitherto be unheard of growth proportions averaging around 6%, avidly stimulated by FDIs, foreign aid and large scale productive investments.
28. Internal strife which precipitated in 1983 retarded growth to some extent and the UNP government’s economic turnaround continued until 1994 with Her Excellency Chandrika Bandaranaike Kumaratunga taking over the high office as the President of the country under the newly formed coalition the “People’s Alliance”.
1994 – 2001: Rule of the “People’s Alliance”
29. The new government come to power in 1994 continued with the open economic policies of the previous regime with a human face and accelerated the privatization process of state owned enterprises. The escalation of internal strife and terrorist attacks on significant economic targets hindered the progress and diverted the attention of the government away from the economy. By year 2000, Sri Lanka was still a low income economy with a per capita of US$ 869, and the GDP amounted to US$ 16.6 billion with unemployment was around 10 percent. For the first time since independence, the growth rate had a contraction in 2001.
2001-2004: A Two-year Turnaround
30. The negative growth syndrome was reversed during this period by a government headed by the incumbent Prime Minister Honourable Ranil Wickramasinghe. The vision of the government created a multitude of opportunities for the entrepreneurs and new investments brought in an aura of goodness coupled with transparency and good governance. The economic policies adopted reaped rich dividends and once again the country was on the road to progress.
31. The bold approach provided a new impetus for the lagging economy and the slow paced economic activity of the previous regime was replaced by a new approach with an urgency to change for the better. However, the beginning of the era is signified by words of prophecy which had been summed up in the following manner.
“The truth is that Sri Lanka is in the thick of an economic crisis – a crisis borne of deep indebtedness. If not arrested soon, it will keep employment and income at the worst nadir for generations to come. Therefore, we need to act prudently and with a renewed vision to stop the country from going down the slope of ruin. The need for reforming the economy is compelling as there is no way we can carry on the current way”.
32. I wish to digress Honourable Speaker, to query as to whether same principles should apply in today’s context too. Words of wisdom, to be rewound and repeated, all over.
33. The government formed in 2001 which governed for two and a half years achieved significant policy changes with the introduction of the Fiscal Management (Responsibility) Act and Consumer Affairs Authority Act, long overdue amendments to the Termination of Employment of Workmen Act, Industrial Disputes Act, Employment of Women and Young Persons and Children Act and also the Welfare Benefits Act. Other revolutionary proposals such as to introduce a new Central Banking Act and a Foreign Exchange Management Act could not come into existence due to the premature dissolution of the government.
34. A focused effort to deregulate the economy through public sector reforms, thereby attracting foreign investments and providing alternative measures received special attention during this period.
35. Amidst these progressive steps, may be politically not the most popular, we managed to maintain strict fiscal discipline and market-friendly policies. We managed to secure the support and assistance from many nations in creating a new vision for economic development during this short span of time. As a result, the economy bounced back with enhanced investments and an improved productivity recording a higher economic growth of 6% with inflation declining to around 2%. However, the envisioned progress and economic revival expected under these policies came to an abrupt end in April 2004 with the change of the government.
2005-2014: Rajapaksa Regime
36. The era from 2005 to 2014 would go down in history as one era where the expectations of the people were at a zenith but the delivery not even mediocre.
37. The end of the internal strife in 2009 signaled the culmination of about three decades of mayhem traversed with terrorist acts of such an inhuman nature which was condemned by all concerned. The people breathlessly looked forward to a future laced with prosperity and happiness. However, the belts that were requested to be tightened during the height of the strife could not be slackened and the economy diverted to a perilous path stricken with mounting debts. The economic rhetoric churned out by “Gobellestic” promoters who were mere crony henchmen of the rulers, were in a cohesive partnership with the creators of never ending hosannas for the ruling elite but the country dragged on towards almost an abyss of no return. The “Bubble had to burst” and it did on the fateful day for the nation on the 8th January 2015.
38. The post strife period commencing 2009 was looked forward to by many as to be the era of reawakening of the nation with harmony and camaraderie between all citizens of the country devoid of racial, religious and caste restrictions. They also expected a rejuvenation of the economy.
39. Honourable Speaker, at this juncture it is my onerous duty to salute the gallant security forces who made it possible to save mother Lanka from about three decades of strife surfeit with the worst form of terrorism. The sacrifices made by our brave security forces, their families and friends will forever be in our minds. No amount of monuments or memorials could ever compensate the sacrifices they made. It is now incumbent upon us to preserve the gift of peace that they bequeathed on us. The freedoms that we have won must be upheld and preserved. We are mindful of the threats that are existing in the world we live in. We are cognizant of the changing face of terrorism. Isolanist policies will not do, instead this requires a very strategic approach working with our neighbors and friends globally. Use of modern technology is vital in maintaining security in the country. Let me reiterate that there will be no compromise when it comes to preserving our national security.
40. A country’s economy could not be run on mere rhetoric and chirpy hosannas for the ruling elite. Tourism industry started to thrive, an outlook of vibrancy, investors returned once again positively interested in the country, new opportunities were available in the international capital markets for public and private sector financing, and as a result, the growth momentum of the economy accelerated showing the way for entering the path for Sri Lanka to achieve the status of a middle income economy. There were major hiccups when a favored politician with a band of goons from the deep-south went on a rampage damaging the reputation of the country and causing irreparable loss of fame to the tourist industry by inflicting damage to tourism through despicable acts to two tourists on holiday. As we all know even the judicial process was unduly delayed and the relevant country of the victims had to intervene to accelerate the process. Other acts of misconduct mainly by political lackeys brought further disrepute to the nation retarding progress.
41. It was shown that the growth momentum had accelerated during the post 2009 period of the last regime but did the average Sri Lankan benefit benignly as the figures depicted. The road to achieving a new economic milestone was heavily showcased of reaching Middle Income status by 2016. But the international condemnation and non acceptance of not only the foreign policy but also the utterances of political mouth pieces of the last regime did not make Sri Lanka a sought after nation by the investors. Our status and ranking of the doing business index suffered. The nation was forced to witness the melodrama of a Cabinet Minister protesting outside the gates of the United Nations threatening to fast himself to death and giving up the protest upon been fed with King Coconut water by the then Leader of the country. That was a political drama at its best but the country suffered. The expected FDIs never realized and existing assistance provided by friendly nations such as GSP plus was withdrawn. Slowly the country was being dragged into an economic hell hole with international sanctions looming up in the near distance.
42. There was a golden opportunity to the then government to implement relevant reforms to sustain the development. With a proper vision and political and economic guidance, the country could have been on the road to becoming an upper middle income economy breaking the paradox of a long stint as a middle income nation, upon achievement. The politics based on misguided economic policies alienated Sri Lanka from many trading partners and investors, resulting in increased burden on public coffers whilst creating numerous imbalances in the macro-economy.
43. We have to accept the fact that the previous government embarked on upgrading the country’s infrastructure including roads, ports, and airports, borrowing at high rates hither to be unheard, granting contracts on an unsolicited basis breaking many accepted norms of tender process in procurement. Honourable Speaker, I do have to dwell further, with reluctance due to the unsavory nature of the unholy and non professional approach of the infrastructure development activities in terms of financial management, governance and the ultimate negative impact on the economy.
44. The unplanned expenditure on infrastructure by the previous government on expressways, ports, airports and roads with the funding from foreign borrowings, at high interest rates, created a huge debt burden leading to a huge debt service burden of both interest and principal repayments. This high cost of funding was not used for investments which generate a return either in terms of local currency or foreign currency required for repaying the maturing debt but merely a long term investment and on some occasions without feasible returns. Sri Lanka could be termed as the only country in the world to be endowed with an international airport which is not even patronized by domestic airlines let alone international flights. So we have an airport to which airplanes do not land and no airplanes take off which is an ideal location for the Peacocks to flock in isolated splendor. The Hambantota sea port also has not stood up for what it is meant for and could be termed as a sea port to berth only a limited number of ships or a sea port with fewer ships. However, the name of the promoter lives on as the name boards to these locations of vast expenditure and waste, to bring out his name for the benefit of visitors who on and off embark on sightseeing.
45. Honourable Speaker, what we have heard through various official and or non- verified sources could be even less than the “tip of the iceberg”. The investigative process may take time but the evidence is of an unimpeachable nature. Honourable Speaker, I request all patriotic citizens of Sri Lanka to be patient until the truth is disseminated and the culprits are found guilty through the due process of law in existence. I also take this opportunity to request the relevant citizens of our beloved motherland to bring back any riches hoarded out of the country as at this crucial juncture the country needs to pool together all such resources.
46. During the rule of the last regime, the government tax revenue as a percentage of GDP declined continuously to around 10.2 % of GDP by 2014, making the economy of Sri Lanka brittle, and Sri Lanka gradually became a country endowed with one of the lowest revenue to GDP ratios. Today, it is ironical that the revenue is not sufficient to accommodate our debt service payments. And remember we were endeavoring to be a wonder in Asia. Yes we had wandered away from the ideals of practical economics, away from reality and are now left to wonder what the so called economic maestros of the last regime had conjured during a decade of control.
47. It is obvious and could be verified with ease that despite improvements in some infrastructure facilities, the real benefits of the economic decisions have not been filtered to rural and regional communities as expected during the post strife period. The living conditions of our people the most valuable asset of our motherland have not been improved to the level, as what would have been expected in the last decade. A critical look at the inequality of income and the Gini-Coefficient depicts that only a handful of Sri Lankans have garnered the largest share of the pie.
2015: National Unity Government – Sri Lanka’s New Dimension in Politics
48. The election of His Excellency the President Maithripala Sirisena in January 2015, and the establishment of the new national government of consensus led by the UNP under the charismatic leadership of the Honourable Prime Minister Ranil Wickremasinghe presents a fresh chapter in Sri Lanka’s socio economic history and contemporary politics. Such a backdrop provides a welcome opportunity for the country to chart a course rationalized with appropriate economic strategies to ensure a future of prosperity before the opportunity is not missed yet again as we did in 2009 and on other occasions as well. It is the time to think of “what you can do for the country and not what the country can do for you”. Famous words from the Late US President John F. Kennedy.
49. Upon being elected, we were faced with many queries which were communicated to us from various segments of the society. If per capita income is so high, bordering the middle income country status why a majority of the population is still struggling to eke out a living. If the growth is so high and inflation is slow, why do the prices of essential goods fluctuate almost every day making the day to day existence so difficult? If oil prices were falling in the international market, why fuel prices did not come down as expected? We did manage to bring forth positive inferences during our short tenure at governance but some questions did remain.
50. If the economy is growing, why are our sons and daughters still unemployed and looking for opportunities out of Sri Lanka. What is the use of highways and airports if they are built at inappropriate locations which do not bring forth desired results from an economic view point? When would a hardworking and committed middle class family afford to buy a small car? If the economy is growing, why is tax revenue ratio falling? In short, the society at large is seriously concerned as to what the true state of the Sri Lankan economy is?
51. The questions that are posed are based on the legacy of the previous regime that we inherited. Vulnerabilities that we inherited with regard to the economy are manifold which remain hardwired into the deep structure of the economy, despite impressive growth figures portrayed during the recent past. It could be said that economic growth was mainly driven by non-tradable sectors unlikely to be sustained sources of growth, ‘Incredible fiscal’ consolidation masking major structural weaknesses in the fiscal sector, long term productivity at risk as investments on human capital development suffering at the expense of increasingly rigid recurrent expenditure commitments, inefficient allocation of resources resulting in suboptimal social welfare as inequality of income levels increasing despite falling poverty head count.
52. The plight of economic woes is almost overflowing. Honourable Speaker, a major effort had gone into generating the budget proposals and we seek to provide a solution with this National Budget for 2016 for a majority of the queries posed.
THE CURRENT STATE OF THE GOVERNMENT FINANCE AND THE ECONOMY
53. Honourable Speaker, I now wish to focus on the task ahead of us. The Sri Lankan economy is stuck in a huge debt stock and a high deficit as well. However, I wish to reiterate that the debt and deficit mess that we inherited is not of our making and we condone the situation in no uncertain terms. We need to take positive action to make an innovative difference and deliver results which are acceptable from not only an economic view point but also from socio political aspects. Of course there is a greater amount of work to be expended on the arena of economic resurrection through what could be termed in mere colloquial terms as budget repair.
54. Every nation must live within its means, and Sri Lanka is no different. As such, we are not in a position to go on a rampage with regard to collection of taxes to generate revenue. Obviously we must continue to focus on the aspect of sensible savings as well. Honourable Speaker, I wish to endorse the principle that we must invest taxpayer money with great care for the benefit of the nation. During the last few years I wonder whether the economic maestros did adhere to this principle when the quantum of resources and opportunities wasted could be taken into due consideration.
55. The structural weakness in the fiscal sector warrants immediate attention without which sustained growth in the long term may not be a reality. The façade of lies churned out did not make good reading for seasoned economists. Fiscal deficit falling from 10% of GDP in 2001 to 5.7% by 2014, total debt, falling from 102% of GDP in 2002 to 72% of GDP in 2014 envisaging to make us believe that some fiscal consolidation had taken place.
56. As I have already stated, servicing of debt uses up all the government revenue which imposes heavy constraints on recurrent and capital expenditure. With an expanding debt profile, debt dynamics had shown some remarkable shifts. In the outstanding stock of foreign debt, the share of commercial loans had gained momentum during the recent years.
57. Our government is committed to follow more transparent market oriented policies that facilitate private sector economic activities and remove various barriers in the economy which disrupt the smooth operation of free markets. This requires drastic reforms to all sectors of the economy, beginning with the fiscal sector.
58. Honourable Speaker, let me present more specific details on some of the burning issues in the country’s fiscal system, issues which are so important and of which all Sri Lankans need to be aware of. We have been discussing these issues for a long period of time over many years, and for the last 10 months, I was granted the opportunity to observe and dissect the real nature of fiscal issues faced by the country. It is my fervent wish that myself, and officials of the Ministry of Finance have addressed the issues utilizing the limited resources to optimize the benefits for the people of Sri Lanka.
59. It is obvious that the strength of any fiscal system depends on the ability to generate a sufficient amount of revenue to meet the planned and necessary expenditure. Unfortunately, it is not the case in Sri Lanka, and the situation has aggravated in the past decade and the action taken has not brought about meaningful results.
60. Declining government revenue to GDP ratio portrays a major macroeconomic concern for the country and this trend has to be reversed on a priority basis. Sri Lanka’s tax revenue was 19% of GDP in 1990 falling drastically to 10.2% of GDP by 2014. Ironically, the growth of tax revenue in absolute terms was just 4.4% in 2014 much below the nominal GDP growth rate of 7.3%. Thus, tax revenue had been unable to keep pace with economic expansion evidenced in recent years which is a serious phenomenon. It is also unfortunate to note that previous attempts to enhance fiscal revenue, have failed miserably during the past. Unbelievably there are about 35 taxes and levies in the system. Some of the laws are outdated and not readily understood by the taxpayers and only a few who are conversant about tax laws could fathom the intricate nature of the system of taxation in Sri Lanka.
61. Falling VAT collection is the main cause of the decline in tax revenue in recent years and the figures depict the malady in no uncertain terms. Revenue from VAT accounted for 41% of total tax collection in 2005, and it falls to 26% in 2014. Further, VAT collection as a share of GDP has decreased sharply from 5.8% in 2004 to 2.7% by 2014. Income tax dilution also had kept pace, falling from a 2.7% of GDP in 2006 to 1.9% of GDP in 2014. As such, although the national income had increased there is no commensurate tax income. Several inherent features are noteworthy as to why tax revenue is falling. The main culprit could be weak compliance due to tax administration issues. A multitude of tax exemptions granted by various institutions also had been hindering positive administration of tax.
62. A majority of the revenue is derived from indirect taxes and the revenue from direct taxes is very low. At the same time, many who could afford to pay taxes and also who are liable for payment of taxes are not in the tax system. It is a well known fact that tax compliance methodology has to improve in an endeavor to eliminate evasion. Further, tax administration also needs strengthening.
63. Honourable Speaker, you would recall that during the last few months, we took some efforts to address these issues opting for innovative measures of taxation. However, it is time to deviate from temporary solutions but endeavor to create a tax regime based on strong reforms to move forward, implementing such reforms which will have far reaching benefits to the country.
64. Honourable Speaker, tax reforms in isolation to bolster revenue would not contribute to strengthen the fiscal system. It needs to be supported with appropriate expenditure rationalization measures as well which is of utmost importance. The question is how we could realize this necessity. We could take a lot of lessons on what should not be done from the period of the Rajapaksa regime when expenditure levels escalated to hitherto be unheard of proportions.
65. I very strongly believe and am convinced that the line ministries and departments could trim down their current expenditure levels. The time has come to critically analyze and evaluate the expenditure needs of the line ministries and departments to rationalize unnecessary expenditure and eliminate excessive administrative overheads which are spent at the expense of the limited direct taxpayers and also the revenue from indirect taxes, including from the poorer segment of the society.
66. As such, I strongly advocate the concept of zero budgeting in formulating the national budget. In fact, with this budget 2016, we have brought in to focus the concept of zero budgeting under which the spending agencies will have to justify each and every item in their respective budget before requesting for allocations. This process will be strictly adhered to in subsequent budgets as well. Honourable Speaker, zero budgeting although derived from accounting principles is practiced in many countries in the preparation of national budgets and I wonder why we took such a long time in the implementation of zero budgeting. From January 2016, the General Treasury will start follow-up actions on reviewing the allocations for respective ministries and institutions.
67. As a responsible government sensitive to the difficulties of the people, we have managed to maintain our commitments by increasing salaries and pensions substantially. In the meantime, we have to also realize that the employment in the public sector has quadrupled over the last several years.
68. Honourable Speaker, the obvious consequence of this phenomenon had been the significant increase in the salary bill, which we believe has escalated to the maximum and may be beyond any yardstick of rationality unless the efficiency of the Public Sector is improved drastically. Hence, we have to look into the most appropriate ways of maintaining the continuity and sustainability of public sector emoluments. This among others includes improving efficiency, effectiveness and productivity of the public sector service delivery.
69. Similarly, another important and sensitive issue which is growing into a huge challenge gradually is the pension liability of the government. The pension bill has increased by 170% during the 2005-2014 period requiring appropriate actions to manage the continuous increase amidst the ageing population and increasing need of resources to counter the ever expanding liability in the future. The increasing numbers of pensionable Sri Lankans and the outlay of funds on pensions could result in serious complications in the future if not addressed in advance at least at this stage.
70. Given the unfunded nature of the current pension system, the cost is likely to increase further over time, which will be a huge responsibility and a burden for future taxpayers. Hence, we need to look at new strategies to ensure that the pension cost will be of an affordable nature to the people of the country. Honourable Speaker, I assure you the government’s commitment to bear the burden of the pension bill of those who have already retired and also those who are in service will continue without any restriction. But, it is essential to formulate an innovative strategy on how we plan out the retirement of new recruits to the government service in such a manner that could make the pension system sustainable.
71. Another related area is the ever expanding grant of subsidies and transfers, which account for about 21% of total recurrent expenditure of the budget. Improved targeting and rationalization of subsidies would need to be actively pursued with improved transparency and accountability to reduce recurrent expenditure so that more resources could be made available for investment in social and economic infrastructure which is essential to sustain the envisaged high economic growth. At the same time, we are fully aware that there are highly vulnerable citizens who need special care and attention in our society. The government will continue to support and recognize the cause and do our best to protect and secure them from any ill effects.
72. Much has been spoken on the subject of public investment in the recent past especially during the period of the Rajapaksa regime where public investment was termed as an important requirement for the development of the country. I would like to lay emphasis on the fact that public investment is essential to the country primarily to promote private investment. There are no divisions or differences on this principle. However, we have to be specific and mindful about our priorities and the feasibility evaluations to create a reasonable return when we evaluate and select public investment programs.
73. During the past, private investment had been crowded out due to the over-expansion of the government. Private investment had remained subdued at a level of 22 per cent of the GDP in the recent past, which reflects a gradual diminution from 24 per cent in 2011 which has to be stemmed by converting the trend. On the other end government investment of 4 per cent of the GDP in 2005 had averaged at around 6% per cent of the GDP during last 10 years. Such increases could be due to investment in large scale development projects but the real issue of concern is how long it would take to realize a justifiable return on such investment. A casual evaluation of the recent public investments with a long gestation period with massive foreign debts at high interest rates had cast a pall of gloom on the economy based on the debt burden.
Public Debt Management
74. Honourable Speaker, as we all are critically aware, the management of public debt requires urgent attention with stringent strategies, to ensure its sustainability. At present, the public debt to GDP ratio stands at around 72%, which is high, by accepted international standards.
75. The important issue that has to be addressed is how we ensure debt sustainability. Obviously, the solution is based and relies mainly on the ability and commitment in mitigating the deficit target in the budget, which needs strict discipline in fiscal management. A key principle in improving debt management is to maintain debt service at affordable levels, and our focus and strategy would be to comply at all times.
State Owned Enterprises (SOEs)
76. The loss making nature of key SOEs has created immense pressure not only on the national budget but also on the entire financial system of the country. An inability to bring in innovative measures to combat the incidence could be termed as a dangerous trend. Hence, there is a strong necessity for the introduction of corrective measures on a priority basis to make them commercially viable enterprises rather than being loss making enterprises.
77. We have already initiated measures to address this malady. The creation of the innovative Ministry of Public Enterprise Development is a key step forward in this regard. What we are focused on is to restructure the management model of SOEs, introduce market based pricing mechanisms in public utilities on a selective basis, rationalize recruitment while adopting measures to improve productivity of the existing workforce, and explore avenues to improve efficiency of SOEs including through the public private partnership.
Other Developments and Issues Concerning the Economy
78. Honourable Speaker, one outstanding achievement of our period of governance of less than one year had been to conquer inflation. For the first time in over 30 years we have witnessed deflation this year. This decline, in my view, represents a structural shift. Moving forward, we expect inflation to remain at a respectable 2 – 3% by the end of this year. In the medium term too, our aim is to maintain inflation at lower single digit levels while enabling the Central Bank to work more independently towards achieving this goal.
79. Honourable Speaker, we are still grappling with issues created and left over by the previous regime. Their publicity on economic performance based rhetoric reached a crescendo at times which could be termed only as an empty shell making a big noise. But as you are aware, the Department of Census and Statistics (DCS) recently published the new rebased economic growth figures, which laid many canards to rest providing a totally different picture. In fact, the economy has grown only by 3.4% in 2013 and 4.5% in 2014 miserly in comparison to dressed up figures. With this background, we expect the economic growth to be around 6% in 2015. We will forge ahead with renewed enterprise and our aim is to achieve an annual growth of 7-8% during the next few years. This budget will be the platform and will provide the impetus to ensure the planned growth levels are achieved.
80. The unemployment index depicts a percentage of around 4.6 of the employable population in the country. But, a critical analysis on an age based basis brings out the true incidence of unemployment of the educated youth at more than 20%. This is a tragic situation. We need immediate remedial measures to counter this malady which should not be allowed to fester. We should recognize the value of education and provide just opportunities for the youth who had managed to attain educational standards.
81. Honourable Speaker, the data of Department of Census and Statistics (DCS) indicates that the poverty index had declined to 6.7%. However, a true evaluation and a feature in Sri Lanka’s poverty indicators is that the number of people who earn less than US$ 2 per day number close to 20% indicating that a large share consists of a near-poor population. Could we be pleased with such a situation? All citizens born in Sri Lanka should have access to the basic necessities of food, shelter and clothing. And it is the responsibility of all concerned to address the relevant issues in an endeavor to provide the correct solutions. We must be seriously concerned about the inequality of income distribution as well.
82. Therefore, economic policy initiatives need to be designed in such a manner that poorer segments of the society are more inclusive in the development process. These initiatives must be better targeted and closely monitored in order to reduce any unnecessary burden on government finances. I am sure that the micro entrepreneurs, who are part of the poorer segments of society looking for new avenues of sustainability, will be provided some positive options by the micro finance institutions and pave way for improvements of an immense magnitude.
83. In order to develop a healthy nation, it is essential to eradicate acute malnutrition amongst Sri Lankan children and mothers. Educating the public through health services and schools and a cohesive policy to provide nourishment to the needy is necessary to strengthen the efforts in this respect. We have reached an international standard in our level of literacy. The present level of the acute malnutrition index by comparing the data with South Asian countries alone will not be a good exercise any more. We will have to compare our standard internationally beyond this region.
84. Honourable Speaker, in this endeavor to bring about a strong economy, we have a long way to traverse to improve our external situation and the Balance of Payments (BOP). This process has to be implemented particularly through introducing measures to improve exports, rationalize imports, encourage other inflows to the current account while introducing necessary reforms in respective areas.
85. Honourable Speaker, Sri Lanka is a country that is endowed with a high trade deficit. Our exports have declined gradually and now stand at a critical 14% of GDP. However, imports have increased and amount to 27% of GDP. The movement of trade of the country as reflected by the imports and exports as a percentage of GDP has declined to 41% of GDP compared to around 60% in the mid-2000s. This decline could be assigned to the short sighted policies adopted by the Rajapaksa regime extending to a period of a decade. Honourable Speaker, the economy of our country has gone through the agony of been subjected to diverse economic theories of so called maestros thus increasingly distancing from the open economic policies and has become a more of a closed economy over the years. The present negative scenario strongly suggests that we need to propel ourselves to promote exports with a cohesive approach duly complemented by innovative methodologies.
86. We also have to ensure the possibility of reducing import expenditure to a sustainable level. Of course I am aware that the growth process would require that import of intermediate and investment goods, as well as fulfilling the needs of a nationwide high income levels. What concerns us at this juncture is the non-existence of required assistance to promote our domestic manufacturing sector and improve the yield of agricultural commodities, with an extended objective to capture export markets too. Our ultimate objective should be to garner new export markets, expand current export markets and diversify export products whilst ensuring food security for the nation through self sufficiency of food.
87. Foreign employee remittances play a vital role in the country’s BOP. We as a government is extremely grateful for all Sri Lankans who are employed abroad and remit their hard earned incomes to strengthen our economy. While appreciating their contribution in no uncertain terms, we should endeavor to restrict our mothers, sisters and daughters being sent to countries in the Middle East as un-skilled employees. The counter measure would be to create employment opportunities in our own country which will negate the necessity for such movement of migrant employment. We will explore all avenues to promote this objective. As a different strategy, we would endeavor to develop the skill levels of our employees so that more skilled and trained people will embark on employment out of Sri Lanka. Such an approach will no doubt add value to the numbers who seek foreign employment opportunities.
88. Honourable Speaker, I do not have to lay additional emphasis on the importance of tourism, which has become a thriving industry generating significant amount of foreign exchange and stimulating economic process and development of our country. It is a foregone conclusion that we are yet to realize the full potential of the enormous value of the country as a tourist destination. We will have to carry out an in depth analysis of what had gone wrong. The petty thinking of the previous regime on harping over slogans will not help us to move on and be a tourist destination to be reckoned by world standards. It is time we stop wandering around trying to focus on what should be the right ingredients to make Sri Lanka what it was originally known “the Pearl of the Indian Ocean”. Instead, we need to develop a comprehensive policy framework to develop this industry and exploit the enormous potential of our resplendent country of historical monuments and idyllic sceneries.
89. The performance of FDIs has been dismal in the last decade and remained well below the potential especially in the background of ending the three decades of internal strife. On average, we have received only US$ 919 million per year during the last ten years thanks to a tyrannical foreign policy spiced with verbal insinuations targeting international leaders by the political fraternity of the last regime. This is totally unacceptable in many aspects. In particular, we need to attract more non-debt creating foreign investment flows to increase the level of investment required to maintain envisaged economic growth path based on the shortfall in domestic savings whilst supporting the growth of exports. Honourable Speaker, the economies of many Asian nations especially the nations who managed to extricate themselves from long years of internal strife are on the road to economic prosperity due to influx of FDIs. We as a country had lagged behind and now is the best time to break the shackles and invite foreign investments to upgrade the economy and accelerate rates of growth.
90. These envisaged developments in the country’s external sector will facilitate boosting Sri Lanka’s foreign exchange reserves and strengthen the rupee in the foreign exchange market.
91. Productivity improvement is absolutely vital to achieve development targets. In the productivity improvement drive, we need to pay special attention on the Agriculture sector, while improving the productivity in Industrial and Services sectors as well.
92. Agriculture productivity and related yields had been at a dismal standard due to many issues relating to quality of seeds, planting materials, low mechanization, lack of extension services, high post-harvest losses, low farm gate prices, as well as lack of storage and marketing facilities etc. The country had invested heavily through the provision of subsidies to develop the agriculture sector and the need to scientifically research the acute needs and the existing shortcomings is of paramount importance. Through such a process I am sure that the living standards of the farming fraternity also could be upgraded.
93. The progress of the SME sector is of vital importance for the success of a nation. As such more attention should have been provided for the development of this most vital sector. An approximately 70% contribution to the GDP from the SME sector is somewhat positive but with a more focused approach the opportunity to improve the sector will provide significant dividends to enhance growth rates. Honourable Speaker, I am compelled to state that the contribution through advances to develop the SME by state agencies had been found wanting whilst the private sector had managed to make a telling contribution during the past year. The focus of the previous regime on SMEs too had been blurred and very little had been done towards the development of same.
94. Honourable Speaker, the country also needs a sustainable industrial policy focusing more on an upward movement of the manufacturing sector improving the value chain from light industrial products towards the manufacture of hi-tech products. Adaptation of technology as well as introduction of innovative options, backed by proper research and development is an essential ingredient. Small and Medium Scale Enterprises (SMEs) will also have to be nurtured, developed and facilitated to build up linkages with large enterprises, which will provide opportunities to interface with larger supply chains. The internationally accepted principles of supply chain management has to be developed to upgrade our industries to the next level of competitive existence. It is the vision of our His Excellency the President to focus on improve the local industry by way of providing support to develop local entrepreneurship.
95. The micro finance sector had developed to be an important economic driver providing assistance to the micro level entrepreneur to be financially inclusive. It may be prudent to state that the micro finance sector contribution to improve the economy in Sri Lanka would have had a positive inference in the lowering of the poverty index during the recent years. However there is a need to regulate the micro finance sector on a priority basis to ensure that the positive developments continue to further flourish.
96. The importance of the Services sector and the nature of the service sector had also undergone a significant transformation over the years, particularly with the introduction of market liberalization, from small-scale sundry services to higher skilled and higher value-added activities such as financial services and ICT. In this context, the policy initiatives in areas such as port and airport related activities, tourism, IT and telecommunication need to be strengthened. The Business Process Outsourcing (BPO) concept had been in existence for a long time. The improvement of the BPO sector on an year to year basis had been high but the overall contribution to the GDP is not significant enough by world standards considering the high standards of our employees.
97. Based on the continued low rate of the unemployment index, it is essential to support improvements in labour productivity and also increase capital intensity. With regard to increases in capital intensity the role of the private sector could be vital importance. With regard to unemployment and labour force participation, the female population is unequally affected, and hence improving the provision of child care facilities and dependable public transport systems could help address this asymmetry. We are fully aware of the tremendous contribution made by the women of Sri Lanka to ensure that the Sri Lanka economy is not subjected to greater adversity. As such all possible avenues have to be explored to provide maximum comfort for the mothers of the nation to continue in their positive endeavors to bolster the nation’s economy.
98. Although Sri Lanka’s archaic labour regulations were updated during the previous UNP administration, labour flexibility still remains low due to legal and social barriers as well as the mismatch between the available skills and the skills required. This task has to be devolved upon educational experts who could create the nexus between these mismatches in charting a new course in educational reform in Sri Lanka. We also need to look at the negative aspects in the context of the recent advances in Sri Lanka’s information and communication technology.
99. In addition, it is essential that physical infrastructure and socio-economic practices are improved to absorb differently-abled citizens into the workforce. The need of the hour is to provide a cohesive approach to addressing the issues of differently-abled citizens not through mere handouts but with the provision of sustainable employment options.
100. Honourable Speaker, as you are aware, successive governments have implemented many policies in the context of education. Nevertheless, Sri Lanka’s education system requires a substantial modernization to create the required human capital base to sustain the growth momentum of the economy. It is essential to realign the education system to move away from an examination-centric, content based curriculum towards a competency based curriculum, helping children to gain life skills and to encourage independent thinking. The shortage of basic sanitation, library and laboratory facilities of schools in underprivileged schools as well as the shortage of teachers in key subjects need to be addressed urgently in order to provide equal opportunities to students in affected areas.
101. The investment level in education over the years by governments had continued to decline which is not a healthy phenomenon. It is time that we took stock of the present negative situation which had prevailed over a period of time. Honourable Speaker, I am sure that the “Yaha Palanaya” government of consensus and good governance will be able to address the issues with aplomb and distinction bringing relief not only to the students but also the employers looking forward for efficient and effective staff.
102. Reforms in the university system can also positively contribute to alleviate the mismatch between the skills of graduates and the requirements of the labour markets, which could be the necessary input to reduce youth unemployment and underemployment.
103. The changing demographic profile requires developing facilities to assist the aging population while improving the overall healthcare provision. Whilst a process has to be created for utilizing the resource base of the aging population for the benefit of the nation their needs also have to be addressed. It is also necessary to address issues such as the Chronic Kidney Disease of Unknown Etymology (CKDU), the widely increasing incidence of cancer and the spread of dengue. His Excellency the President is committed and relentless by working to eradicate the menace of the CKDU thus bring in relief for the mases who are suffering from it.
104. The ageing population challenge caused by the slow population growth needs to be taken into account with a long term focus through strengthening and the introduction of innovative retirement benefit schemes and with the reformation of the healthcare sector. The necessity to develop pension schemes for the benefit of the private sector employees too assumes tremendous importance at least to ensure that in the future, issues pertaining to senior citizens could be minimized.
105. The demographic transition taking place in Sri Lanka with a gradually ageing population and increasing life expectancy underscores the need for the development of savings and pension options to cater to the requirements of a rising share of the population that are reaching retirement age. The urgency to develop these products is intensified by the low interest rates prevailing in the market and the dependence of many retirees on interest income.
106. With the population growth and improving socioeconomic conditions, the requirement of good quality affordable housing has also increased over the years. This is a serious concern in the Colombo district where there is a relatively high population mainly due to internal migration. The UNP governments of yesteryears specially during the Era of Late President His Excellency Ranasinghe Premadasa focused on providing houses for the people and I am happy that the process has been reignited.
107. The requirement for housing of the middle income earning categories has grown over the years, and this segment of households is less able to access housing projects run by the private sector due to associated high costs. Therefore, government intervention is required to introduce housing schemes at affordable prices probably through public private partnerships.
108. Also, the current capacity of public utilities such as electricity, water supply and sewage and solid waste disposal, telecommunication and internet, and public transport is barely adequate to cater to a modern economy effectively and efficiently. The principle of “Magapolis” could be a welcome option to address such issues in the Western Province.
109. The inefficiency of the public passenger transport system has resulted in increasing numbers of private vehicles on the roads transporting fewer numbers of passengers per vehicle leading to heavy traffic congestion, causing increased fuel costs to households and to the economy and a substantial loss of productive man hours. In spite of heavy investments in infrastructure development, the issue of congestion persists due to the lack of good quality and reliable mass transport options. Therefore, it is important to take appropriate measures to improve the existing road and rail transportation systems especially in urban areas. Honourable Speaker, we must take cognizance of the fact that new highways and bitumen laid roads alone would not provide an upgrade for the standard of transport in a country, which would have been the yardstick of the last regime, based on their over-zealous attitude to improve the road network. The important aspect is to what level the public transportation system should be developed to ensure that any citizen of the country could utilize the facility without resorting to private transportation.
110. Given Sri Lanka’s strategic location and improving international relations, it is timely to encourage private sector-led commercial activities, which could effectively use the existing infrastructure productively. Encouraging the private sector to establish financial institutions that offer offshore services could generate skilled employment opportunities and support increased economic activity. In parallel, a conducive legal infrastructure to facilitate operations of a global commercial centre should be developed in order to promote financial flows. It is time to move out from the age old economic options and focus on new and innovative measures as practiced by many developing and developed nations.
111. The focus on development needs to be aligned with environmental concerns. In this regard, a stringent and efficient mechanism needs to be established to ensure that all the required environmental approvals have been obtained before the commencement and execution of all projects. We have several outstanding classic examples on how the ecology and environmental issues have not been addressed properly in major projects. Such issues bring out not only tremendous complications but also leave legacies for the future difficult to unravel.
112. Our emphasis on sustainable development also requires that we promote energy use on a more environment friendly and efficient manner. It is essential that we increase utilising latest technology in solar and biomass based energy generation in place of fossil based power usage in electricity, transport and related sectors.
New Economic Order
113. Honourable Speaker, the new government has a responsibility of addressing these concerns and turning many of these things around to create a strong base for future economic and social development of the country. In this context, we have to work hard for ensuring a truly national recovery. Our aim is to create value and new opportunities with economic democracy which means freedom to choice.
114. The improvement that we envisage will be reflected in improved international indices, which in turn, will facilitate future economic growth. The expected improvement of Sri Lanka’s position in Doing Business Index, Global Competitiveness Index, Global Innovation Index, Network Readiness Index as well as Global Economic Report are some of the important areas in this context.
115. Hence, the government is committed to follow more market oriented policies that facilitate private sector economic activities and remove various barriers in the economy which disrupt the smooth operations of the markets. The new economic order will be signified through the budget proposals and I am happy to formulate the same from a zero based platform alienated from previous mistakes and bias.
116. Honourable Speaker, we have had a host of lost opportunities. The Late Honourable Prime Minister Dudley Senanayake’s tenure was strewn with two. When an option to construct a road to Jaffna was discussed he preferred to grant a measure of rice to the people as an alternative. Entry to “ASEAN” was offered to Sri Lanka in 1967 on a platter. Honourable Dudley Senanayake’s close friend, the First Prime Minister of Malaysia the Late Honourable Tunku Abdul Rahaman had insisted that Sri Lanka becomes a member of the ASEAN. Honourable Duduley Senanayake had reached the airport to embark on the flight to take part in the conference but upon been informed of dissension by some left oriented parties, had aborted the mission. Reportedly, the commencement of the meeting had been postponed for six hours assuming Honourable Dudley Senanayke’s flight is delayed. Since then, with regret, we try to seek membership of this high profile regional association without success. I could illustrate many more of such opportunities and it is time that we learnt from the bitter lessons.
117. We are not in a position to miss further opportunities. We will ensure the delivery of what is presented today and let us look forward to a future of happiness and prosperity. Our committed objective is to provide all Sri Lankans with a better tomorrow devoid of any differences. Let us unite and rally together for the sake of future generations and our motherland.
118. Honourable Speaker, we are ready, we have the will and we are able to provide the required leadership to carry out the programme that will be outlined below. We will just forget the past and unite to endeavour to this vital task.
119. At this juncture I, on behalf His Excellency the President, Honourable Prime Minister, my Cabinet Colleagues and the government, extend a hand of friendship to all supporters of various political hues to rally together in an effort to drive our nation forward on the road to prosperity. I have depicted the correct status of the economy which has to recover from years of turmoil and if we do not unite, our chances of survival will erode. “Without cursing the darkness let’s light a candle and dispel the gloom”.
120. In this background, now I wish to turn into the proposals in the maiden budget of our government. A government devoid of racial, religious or social barriers, a government of consensus dedicated for the betterment of the Democratic Socialist Republic of Sri Lanka and all its people.