The budget of the newly elected government of Sri Lanka was presented to the parliament Nov. 20. It was passed into law after the third reading Dec. 19.
There has been so far mixed reactions to the budget both within the country and from the international community.
The government has the tough job of negotiating strict monetary policies within the country, as it tries to reduce its fiscal deficit. The deficit is currently estimated at 740 billion Sri Lankan rupees. As is to be expected in any country imposing monetary restrictions, demonstrations against some of the policies have been taking place.
Therefore, the proposal that was passed had the necessary amendments added to it. The amendments themselves will result in a difference of 35.5 billion Sri Lankan rupees, which equals $247.78 million approximately.
There were many reforms and development plans within the budget proposal. Foreign investment is encouraged through various incentives such as exempting income tax under certain conditions and reducing restrictions on foreign ownership of land.
On the one hand, education and health expenditure has been increased to create new infrastructure for people. On the other hand, there were many policies that would help the government create revenue from taxation such as the proposed increase in motor vehicle taxes. These and other economic reforms were an effort to bring down the budget deficit of 6 percent reported this year.
The 2016 budget deficit, which is slated to be Rs 740 billion or almost 6 percent of the GDP, is still an indication that the country has yet to find strong footing in terms of the economy.
However, with a possible International Monetary Fund arrangement on the horizon, the country might have to brace for further regulations to reduce this deficit. According to Reuters, the IMF has already warned about an uncertain economic outlook that required action from the government in order to gain economic stability.
Therefore, the final reception of this budget will be a test of the resilience of the government. Already, there has been many public demonstrations against individual policies. There was a protest by local farmers about a cut in subsidies for plantation crops that resulted in a revision to include these subsidies. Strong opposition has also led to revisions to a proposal that would have added revisions to pension schemes of public sector workers.
Trade union workers continue to oppose the revisions that have been made.
It is yet to be seen, the effects and the reception of the budget on the long run. For the sake of the country, it is of utmost importance that the opposition party, the different trade unions and the government come to an agreement about how the country should proceed.
If the country does not internally agree on key issues, it will be difficult to come up with a practical strategy and rise up economically, especially with the IMF standby agreement so close in the future.
As youth observing this process, it is hard not to think that there is a divide in the country based only on the political affiliation rather than a constructive divide based on only the issues.
During the voting for the budget, some members of the parliament who backed former President Mahinda Rajapaksa, voted against the proposal. This is an all-too-familiar scenario where the opposition opposes proposals on the virtue that they are the opposition. Here is an area in which a lot of people would like to see a change.
This government has the potential to pump some vital life into the politics of Sri Lanka. They had many grand promises about the change they would bring to Sri Lankan politics that had long suffered from corruption.
The country will continue to lose faith if the government is continuously unable to show the people a tangible change.To this end, people can only wait to see the results of a budget that the government promises will boost the economy.