The Parliamentary Committee on Public Finance (COPF) has been informed that revenue and grants have increased by 33.1% in 2024 compared to 2023.
Officials representing the Ministry of Finance revealed that this represents an achievement, with revenue collection reaching 99.1% of the anticipated target for 2024, the highest recorded percentage in history.
The officials disclosed this information while presenting the state financial performance for the years 2023 and 2024 during a meeting of the Committee on Public Finance held on Tuesday (25 Feb), Chaired by MP Harsha de Silva.
Value Added Tax (VAT) :
According to the Finance Ministry officials, the increase in VAT rates and the removal of tax concessions on 95 out of 137 previously VAT-exempt items contributed to this outcome. Stating that additionally, maintaining higher fiscal discipline compared to previous years has been a key factor in achieving this success, they emphasized that this discipline could be further strengthened in the future. Addressing the meeting, MP Harsha de Silva emphasized that the reason for this is the financial discipline created through the legal provisions under the Public Financial Management Act. He further underscored the importance of maintaining such fiscal discipline in the long run to ensure economic progress.
Revenue and grants-to-GDP ratio :
The officials of the Ministry of Finance stated that the revenue and grants-to-GDP ratio, which stands at 13.6% in 2024, is expected to reach 15.3% by 2029. However, the Committee pointed out that this projected figure for 2029 is still insufficient, as the average for middle-income countries is approximately 20%. The need to improve tax administration to enhance this situation was emphasized during the meeting. Moreover, the officials highlighted that, in addition to proper tax administration, Key Performance Indicators (KPIs) have been introduced for institutions such as the Inland Revenue Department, Sri Lanka Customs, and the Excise Department, with the expectation of achieving these targets accordingly.
“Citizen’s Budget” :
During the meeting, officials also presented a summary of the “Citizen’s Budget” to the Committee, making the current budget more understandable to the general public. This summary detailed the allocation of funds for 12 sectors, including health, education, and transportation etc. The officials stated that the objective of this initiative is to ensure greater transparency, enabling taxpayers to understand how their tax contributions are being utilized by the government. The Committee instructed officials to present this “Citizen’s Budget” report in comparison with 2024 figures under the Public Financial Management Act. Furthermore, the Committee commended the officials of the Ministry of Finance and the Department of Government Printing for preparing the report in a manner that is accessible and engaging to the general public.
Tax revenue from vehicle imports :
The Committee questioned whether the expected revenue of approximately Rs. 330 billion could realistically be achieved, given that only Rs. 83 million in Letters of Credit has been opened thus far, as reported in the media. Officials responded that the high taxes imposed on vehicle imports would enable the achievement of this revenue target. The Committee Chair further instructed officials to provide regular updates on this projected revenue to the Committee.
Losses of state-owned enterprises :
The officials provided details on the profits and losses of state-owned enterprises (SOEs) from January to October 2024. It was disclosed that SriLankan Airlines had incurred a significant loss during this period, while the total profit generated by 52 state-owned enterprises amounted to Rs. 428 billion. In contrast, the total losses incurred by SOEs in 2022 amounted to Rs.774 billion.
Agricultural warehouse project in Dambulla :
The Committee Chair also raised concerns regarding the agricultural warehouse project in Dambulla, which was initiated in 2019 but has yet to be operational. Despite the completion of all construction work, delays in procuring refrigeration units have caused a setback in launching this project. The officials confirmed that the warehouse was constructed with a grant from India. The Chair of the Committee emphasized that failing to make this facility available to farmers is a significant issue and urged immediate action to operationalize it.
Colombo National Art Gallery :
Attention was drawn to the five-year closure of the National Art Gallery, Colombo. It was revealed that Rs. 120 million has been allocated for its renovations, but delays in the procurement process have hindered its reopening. The Committee Chair urged the relevant authorities to expedite the necessary work to reopen the facility to the public as soon as possible.
Public debt:
Given that a separate law has been enacted for debt management, the importance of effectively implementing its provisions was stressed. The Committee Chair, MP Harsha de Silva emphasized the need to recruit highly skilled professionals to ensure efficient public debt management. (Newswire)
