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A welfare budget coupled with reforms
COLOMBO (Daily Mirror) - President Ranil Wickremesinghe in his capacity as the Minister of Finance yesterday presented a multi-faced budget with greater emphasis on a welfare package which comprises a salary hike for public servants after nearly a decade.
The budget proposals accommodate recommendations made by the IMF, including the restructuring of two main banks, while introducing welfare packages, a new tax structure and a green economy.
The proposals also include mega development projects, and address the higher education needs of the country.
On the restructuring of the two state banks, President Wickremesinghe said, “The government is keen to ensure that all prudent measures are taken for long-term banking stability. To this end, for systemically important banks, an independent asset quality review supported by the IMF program was conducted. The preliminary results of this asset quality review indicate the need to build additional capital accumulation on a prudent basis.”
To resolve this, the President proposed the allocation of Rs. 450 billion to support the capital improvement process in the banking system.
“The proposed provision to improve the capital of the banking sector will ensure the stability of the banking sector in the long run. I propose that 20 percent of the shares of the two large state-owned banks should be given to strategic investors or the public to improve capital and support the future growth of the two state-owned banks to reduce the burden on taxpayers' funds,” he explained.
He also announced that the country will go for international debt restructuring in the coming year through new dollar instruments.
The welfare package which was announced by the President included a Rs 10,000 allowance to the public servants. Increasing pensions, senior citizen allowance , reintroduction of Suraksha insurance scheme for the school children, land ownership to farmers and estate community.
At the same time tax structures were announced which included increasing VAT to 18 percent while it was revered for the health sector and other essential goods.
He also announced a proposal for a green economy which would fulfill sustainable economic development goals while the proposals composed optimistic mega projects such as constructing an international airport in Hingurakgoda.
The President began and ended his speech by claiming the budget was based on Buddhist philosophy.
“Buddha has elucidated on a concept called “Samjeewikatha” (balance Living). He explained this concept in the Vyagghapajja Sutta. The concept elaborates on how to balance our budget. The Buddha has advised against leading a pompous and extravagant life, while receiving a low income. He explains that a mindful person would lead his life in a way that his income is aligned with expenditure.
We should spend according to the income we receive. That is what Buddhist Economic philosophy demonstrates to us,” President Wickremesinghe said.
“But, for the majority of the 75 years following the independence, our spending has often diverged from our generated revenue. When I say this, one might think that the governments of this country spent lavishly and wasted money. Not just governments, the country as a whole had done it has lived beyond its means. In the Samajjapala Sutta, the Lord Buddha has emphasized that we should borrow for investment rather than for consumption. But we borrowed for consumption. Ina Sutta in Anguttara Chakka Nipatha specifically points out that it is very dangerous to borrow and pay interest in this manner. After 75 years of independence, we now find ourselves in a dire situation as a result of ignoring Samajeewikatha and Buddhist economic philosophy. Our economy collapsed completely, leading us to a status of bankruptcy,” he said in this regard.
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