The gulf between what the National People’s Power (NPP) said on the campaign trail and what it is saying now in government, was repeatedly highlighted by the opposition when Parliament debated the country’s “Mid-Year Fiscal Position Report – 2024.”By Sandun Jayawardana The Sunday Times 12-01-2025
The government drew attention to the sacrifices made by ordinary people in the country’s economic recovery from the depths of bankruptcy. The opposition though, countered that the government had not followed through with many of the pledges it had made to provide relief to those same people. Opposition MPs challenged the government to introduce these measures in the upcoming budget.
Presenting the adjournment motion on Tuesday (7), NPP National List MP Dr. Najith Indika noted that as per the mid-year fiscal report’s summary, the economic growth rate had improved significantly compared to its situation during the same period in 2023. The economic growth rate, which was -7.3% in 2023, had improved to 5% by the first quarter of 2024. Many sectors had recorded growth while inflation had reduced from 1.3% in 2023 to -0.5% in 2024. The budget deficit had narrowed from Rs. 1242 billion to Rs. 598 billion and overall revenue had gone up from Rs. 1314 billion to Rs. 1860 billion. Tax revenue had gone up from Rs. 1198 billion to Rs. 1709 billion – an increase of 42%.
While the overall picture in the report clearly points to the economy having significantly improved from where it was in mid 2022, when Sri Lanka declared bankruptcy, what should not be forgotten is that the country’s economic crisis was a “man-made disaster” brought about by the politicians in power till then, but for which ordinary people had to pay a very high price, Dr. Indika stressed.
“People dropped dead in queues. Many left the country. Families broke up as a result. Hospitals didn’t have medicines and the number of children dropping out of school increased. The crisis became a social tragedy. So it was the public that paid the price for this economic recovery. We need to remember them with respect,” he told the House.
Seconding the motion, NPP National List MP Lakmali Hemachandra observed that there is an ongoing dialogue regarding who should get the credit for the country’s recovery from bankruptcy. While it is good that such discussions are taking place, she emphasised on the need to acknowledge that the recovery owed a lot to the immense sacrifices made by the vast majority of ordinary Sri Lankans.
The report itself offers insight into how much people suffered, she said, pointing out that for example, the amount spent on welfare programmes in government schools had reduced by 30% in 2024 compared to the previous year. The amount spent on school text books had been reduced by 70% compared to 2023. “Who would have borne the burden of these expenses when the government reduced its spending on education? It would have been the parents of the children, especially the mothers. Some may have been forced to quit their jobs and stay at home full-time to look after their children, or they may have gone abroad to work in high-risk jobs,” she said.
While the government is speaking of the need to acknowledge the sacrifices and hardships undergone by ordinary Sri Lankans in helping to take the country towards economic recovery, it is yet to honour many of the promises it made on the election stage to provide relief to those people, said Samagi Jana Balawegaya (SJB) Colombo District MP Dr. Harsha De Silva. He pointed out that the NPP’s own manifesto had criticised the “destructive economic policy” of previous governments. If that is the case, he questioned how the new government could continue with the same model, which is what they were now doing. The SJB MP said he expected the government to introduce a new programme going forward.
He recalled that the NPP’s manifesto had pledged to increase the annual tax threshold for individual income tax from Rs. 1.2 million to Rs. 2.4 million. Many professionals voted for the NPP based on this pledge, but the government is now saying it cannot be done and that they can only raise the income tax free threshold from Rs. 100, 000 a month to Rs. 150, 000. In order to offset the losses from that decision, the government has raised Withholding Tax from 5% to 10%, but there is no mention anywhere in the NPP manifesto about raising Withholding Tax, the MP noted.
While the NPP pledged in its manifesto to introduce a 0% Value Added Tax (VAT) rate for food items, the government had already sent several orders under the Special Commodity Levy Act to the Committee on Public Finance for consideration. Accordingly, the government was asking for approval to continue the previous policy of imposing taxes on all imported food items including lentils, tinned fish and onions, Dr. De Silva further noted. “You can say various things and lay the blame on many people, but there is a huge contradiction between what you said on the campaign stage and what you are telling us now,” he told the government.
Opposition Leader Sajith Premadasa meanwhile, questioned the government if the mandate it received from the people included continuing as it is with the programme agreed between the previous government and the International Monetary Fund (IMF). “The statement they made before the election about conducting a new debt sustainability analysis and entering into a new agreement with the IMF has been smashed into the ground,” he alleged, accusing the government of treating the people’s mandate with contempt.
Overall, while the mid-year fiscal position report has shown marked improvements in achieving economic targets, social indicators show that the disparity in the distribution of wealth has widened, Deputy Minister of Economic Development Prof. Anil Jayantha Fernando told Parliament. “The economic policies adopted by previous governments eventually led to the country’s bankruptcy, but they tried to hide their role in the collapse, claiming it was due to the COVID pandemic. This was a myth. They then told the people they were the ones best placed to effect an economic recovery.”
He added the NPP government fully recognises the limits it has to adhere to when dealing with the IMF.
This week also saw the government tabling the Appropriation Bill 2025 to Parliament for the First Reading. President Anura Kumara Dissanayake is scheduled to make his Budget Speech to Parliament on February 17. Meanwhile, the government also tabled the Local Authorities Elections (Special Provisions) Bill, which paves the way to cancel previous nomination lists for the long-delayed local government elections and call for fresh nominations.
Parliament will reconvene on January 21, with a two-day debate on the government’s “Clean Sri Lanka” programme to commence on that day.⍐
