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| People lined up to secure fuel during the economic crisis in 2022. Pix:Daily FT |
By Niyanthini Kadirgamar
In his spirited budget speech, President Anura Kumar Dissanayake described the
priority for the first budget of the NPP government as thus: “Mass struggles and last
year’s election saw people asserting their political rights. What is necessary is for
economic rights to be similarly asserted. This is the philosophy of this budget.” As the
President rightly pointed out, a national budget is not merely a technocratic exercise of
allocating state funds to various ministries for the year, but it also reveals the
fundamental ideological thrust of a government – a compass, guiding its economic
vision.
The mood leading up to the reading of the 2025 budget proposals in Parliament was
somber. Expectations were low for what the newly elected government will be able to
deliver, given the reality of a tightly constrained fiscal space. The Dissanayake
government had hardly any wiggle room to develop policies independently. It was not
able to sufficiently change the poorly negotiated, International Monetary Fund-backed
debt restructuring deal under Ranil Wickremesinghe’s presidency. Despite its pre-poll
pledges to renegotiate the terms of the IMF agreement, the government appears to have
simply succumbed.
The shadow of the upcoming IMF review weighed heavily on policy makers, and the
outcome of the Budget was predictable – one that would appease the IMF. Nevertheless,
it was the maiden Budget of the government under President Dissanayake’s leadership
who also heads the Finance Ministry. There was enough curiosity to see what a newly
elected government could whip up to reassure their voters, many of whom are reeling
under the impact of IMF-imposed austerity measures.
Budget Priorities
A useful point of analysis is to ask if the government’s stated intention of prioritizing
people’s economic rights in the budget, by evaluating provisions made for those most
harmed by the economic crisis.
The economic crisis pushed 5.5 million Sri Lankans into poverty, as the poverty rate
drastically doubled to 25% in just two years. Half of Sri Lanka’s population (11 million
people) have been found to be multidimensionally vulnerable. One third of the
households are facing food insecurity. Women and children suffered the most due to no
fault of their own, as their access to nutrition was severely impaired. Underweight rates
showed an increase among children and expectant mothers. These realities have not
changed for the country’s working people, mostly women, who bear the brunt of the
crisis, as well as the burden of reviving the economy since.
The massive mandate that the NPP received in November reflected sentiments ranging
from desire for change and hope to frustration and desperation of our people. Many
voted them into power fervently wishing that the NPP would reverse their deprivation,
compounded by past governments’ abject failure to address serious questions of food
security and social protection during a long-simmering crisis. The justification for
ensuring their economic rights in NPP’s first budget should have been an easy choice.
Disappointingly, the 2025 budget fails to make social protection for the most precarious
families a budgetary priority. The amount allocated for cash transfers to low-income
families under the Aswesuma programme is Rs. 160.1 billion, which amounts to a
meagre 0.5% of GDP. The figure should be understood as a shrinking of the cash
transfer programme. There is not even a nominal increase from the allocation in 2024
(Rs.161.7 billion).
Aswesuma is the only state-led programme that is focused on offering relief to the most
vulnerable sections of society, including low-income families, the elderly, persons living
with disabilities and kidney patients. In addition, the NPP government introduced
financial assistance to purchase school stationery to the programme. In total, the
amount allocated to all such different vulnerable groups is only Rs. 232.5 billion, an
appalling 0.7% of GDP.
The recent thrust on increasing government revenues has meant that working people
have paid a higher share of the increases through indirect taxes on goods and services,
even as they were forced to contend with inadequate food, medicines and education for
their families. While more than half of the public revenue is generated through indirect
taxes, only 4.7% of the total budget revenue is allocated to be distributed back to the
families who have helped raise them through Aswesuma. Far from fair redistribution,
this approach signals a cruel transfer of the burden of the crisis onto those already poor.
Addressing the ideological beasts
A genuine attempt at addressing the economic rights of marginalised populations
should necessarily begin with questioning the underpinning assumptions and design of
the Aswesuma programme itself, and not merely introducing token increases and
additions to it. Multiple studies have shown that Aswesuma, introduced by the previous
government under the guidance of the World Bank, is a fundamentally flawed scheme
and a very weak replacement of the Samurdhi scheme, which has been left in limbo with
no clear future direction.
The government must draw up a plan for the Samurdhi Bank which holds the
compulsory savings of the poor households, their shares in the bank and the funds
generated, the social security programmes formerly provided through the scheme and
the Samurdhi societies at the village level in a manner that ensures economic justice to
its members. Meanwhile, there is an urgent need for a new social protection system to
be designed.
Amid demands to move away from a targeted programme towards a universal social
protection programme, the Citizen’s Budget document misleadingly attempts to provide
the impression that Rs.749 billion has been allocated to a “Universal Social Protection
System,” although the categories listed under it are all narrowly targeted programmes. It
raises a troubling question about what the NPP government’s understanding of a
universal social protection system entails.
Despite its stated intentions, the allocations presented in the Budget do not reflect that
the economic rights of those who are living in the most precarious conditions within Sri
Lanka’s unequal economic system have been safeguarded. The pressing question before
us is whether the NPP government has ideological clarity and political will to ensure
that economic justice is delivered in the 2026 Budget. If so, it will have to seriously
contend with the beast that is the IMF.
The government has taken a defensive stance while responding to opposition voices
seeking to criticize the “neoliberal” Budget. It should not worry too much about the
taunts coming from the parliamentarians who wear the neoliberal badge on their sleeves
or those voters have chucked into the dustbin of history. However, the government
should be concerned that functioning within the IMF’s iron clasp cannot result in
anything other than becoming puppets for its guiding ideology, at the cost of support
from a vast majority of our population.
In his Budget speech, the President revealed an awareness of the danger and stated that
achieving economic sovereignty is necessary to be able to design our own economic
agenda. It is up to the government now to demonstrate that it is serious about charting
an original path and is unafraid of veering away from the IMF programme or exiting it.
It must recognise that even the IMF’s version of macroeconomic stability cannot be
sustained by its policies that impoverish our people. The government’s efforts to revive
our national economy must be driven by a firm commitment to economic justice, not to
the IMF. (Courtesy- Daily FT)
Niyanthini Kadirgamar is a PhD candidate in Education at the University of
Massachusetts Amherst and a member of the Feminist Collective for Economic Justice
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