2024 Budget update

It’s that time again – delving into the financial roadmap of Sri Lanka for 2024.

Overview

The proposed budget for 2024 paints an interesting financial landscape for Sri Lanka, with anticipated revenues and grants hitting LKR 4,127 billion against expenditures of LKR 6,978 billion, leading to a significant deficit. A notable shift is expected in the tax revenue to GDP ratio, increasing to 12.1%

Tax Collection Strategy

Aiming for LKR 3820 billion in tax revenue, the government plans a diverse approach, focusing on goods and services taxes, income tax, and external trade taxes.

Major Development Initiatives

Economic growth is at the forefront, with new investment zones and infrastructure projects like Punarin City, Trincomalee developments, Hingurakgoda International Airport, and the Central Expressway’s second phase. The budget also emphasizes bolstering the digital, gig, creative, and green economies.

Incentives and Relief Measures

Public sector employees, pensioners, disabled individuals, kidney patients, and the elderly are set to benefit from a range of relief measures. SMEs can anticipate a boost through a new loan scheme, with additional support for estate dwellers, farmers, and low-income urban families.

Tax Reforms

The 2024 budget introduces significant tax changes, focusing on a fairer system with more emphasis on direct income and corporate taxes. Value-Added Tax (VAT) rates and coverage are set to increase. Simplification of the tax system and mandatory Taxpayer Identification Numbers (TIN) for financial transactions are also on the agenda.

Learn more from our summary of tax provisions for 2024.

Education and Healthcare Development

The budget plans for the establishment of foreign universities, interest-free student loans, upskilling initiatives, and English literacy programs. Healthcare infrastructure receives attention with new state universities and a dedicated medicine procurement institution.

Impact on State Banks and Finance

Strategic changes in the financial sector include selling stakes in the Bank of Ceylon and People’s Bank, capital improvements in the banking sector, and the introduction of new financial legislation.

Final Reflections

The 2024 budget is poised to drive Sri Lanka towards significant economic and societal advancements, focusing on comprehensive development and improved public welfare.