2025 Budget introduces a new approach for the public economy
The Finance Ministry is crafting the 2025 national budget with a focus on enhancing production capacity, improving living standards, and managing economic policies to facilitate a recovery on the directions of President Anura Kumara Dissanayake.
It aims to introduce a transformative strategy designed to rejuvenate the economy for the benefit of the people. It intends to tackle the urgent economic issues citizens face while fostering sustainable growth and inclusivity, a ministry official said.
Scheduled to be presented to Parliament before March 2025, the budget will adhere to fiscal policies intended to stimulate growth and allocate resources for essential socio-economic initiatives aimed at alleviating the current financial crisis.
The forthcoming budget anticipates revenue at 15.1 per cent of GDP, approximately Rs 3.9 trillion, while expenditures are projected at nearly 20 per cent of GDP, around Rs. 5.2 trillion, striking a balance between recurrent and capital investments.
The IMF recommends prioritising revenue increases over expenditure cuts, although both strategies could help address the primary deficit. The focus will also be on improving the efficiency of capital investments to yield better returns from public spending.
Revenue enhancements are expected through broadening the tax base and improving compliance, while expenditures will prioritise effective capital investments that provide high returns.
Aligned with the Public Financial Management Act and the 2025-2027 Medium-Term Fiscal Framework, the budget also anticipates external funding sources, including US$1.363 billion from the IMF, $400 million from the World Bank, and $300 million from the Asian Development Bank, in addition to $3.655 billion in debt relief.
Furthermore, plans include a 24-50 per cent increase in state sector salaries along with periodic wage adjustments. An interim budget for early 2025 is anticipated later this month.
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