THE BIG PICTURE
BUDGET CAPERS There are seemingly two trends of thought that commentators from one side of the fence or the other have voiced since the president presented his government’s second budget on 7 November: one is that is it a playful leap into a more stable future; the other is that it’s a prank of some sort.
Bouquets (as usual from within the ranks of the administration, its hangers on and chamber types) and brickbats (from across the aisle and opponents of the incumbents) aside, there’s surely a sense of relief that despite predictions to the contrary, Budget 2026 doesn’t contain any new taxes!
From a layman’s perspective, the big picture is that our economy continues to reflect the diktat laid out by the IMF in collaboration with the former government, under the fund’s US$ 3 billion Extended Fund Facility (EFF) – and that too is a relief, even if it means that the incumbents continue to ditch the promises they made to the electorate. Sri Lanka doesn’t have a choice but to do stay on course.
And that’s where the ‘good news’ ends…
Our fellow citizens who continue to live below the poverty line maybe wondering when their turn out of the misery (that too was an election promise) will come – with or without the IMF.
It is a crying shame on us all that more than a quarter of the citizenry are still finding it difficult or even impossible to make ends meet. Not even the deflationary milieu that we are slowly but surely coming out of has made a difference to the poor.
In the light of the plight of the poor, the decision to purchase brand-new double cabs for members of parliament (and controversially, this announcement came only three days after a Rs. 12.5 billion tender for 1,775 such vehicles was closed, reportedly just a week after it was advertised) flies in the face not only of its ideology but also taxpayers who continue to suffer the burdens that go with a high tax regime.
The government’s anticorruption drive has also been the talk of the town for some time. Opposition MP Dr. Harsha de Silva, who opened the budget debate the day after it was presented in parliament, said he supports it but rightly cautioned that the modus operandi shouldn’t be driven by political interests.
To this end, he cited the controversial release of containers from the port, the sugar import scam and the e-visa swindle – and one is inclined to add the pending cases against government bigwigs that seem to have taken a backseat as allegations against their predecessors take centre stage.
So the government faces a defining test of credibility…
Will it hold its own members accountable under the standards it has promised to uphold? And is the fight against corruption selective?
Meanwhile, the plight of micro, small and medium enterprises (MSMEs) has also come under the radar for all the right reasons.
In a what seems like a desperate attempt to widen the tax net – when the big money tax evaders go scot free – the government announced a reduction in the VAT threshold from Rs. 60 million a year to 36 million from April 2026, which will undoubtedly burden the smallest of our businesses with the convoluted administration of value added tax and compel them to raise prices – and this in turn will be borne by consumers who continue to be challenged by the cost of living.
And while we have been assured that our forex reserves are healthy and Sri Lanka will be in a position to repay its debts when the moratorium ends in 2028, there have been reports to the contrary as our dependency on imports (motor vehicles included) shows no signs of abating.
If there’s one marker on this score, it may well be the value of our currency – which has fallen by around four percent (from Rs. 293 against the greenback at the beginning of this government’s term late last year to around 305 rupees today).
The judgement call is yours…
