Finance Minister Ravi Karunanayake, on behalf of the government, will present the 2017 budget to Parliament tomorrow. This is his third budget. In an interview with , Daily Mirror he says the government has formulated this budget with the target of stimulating economic growth that would result in job creation and income generation. According to the Appropriation Bill presented ahead of the budget, the government has planned to reduce the budget deficit this time. Ahead of the budget, the government also introduced the Value Added Tax (Amendment) Bill despite heavy public criticism.
He shared the following:
Q How are you getting ready to present the budget?
Basically, we will have a Cabinet meeting early in the morning. Then, we will move for the presentation of it. We worked day and night for the formulation of it. In fact, we had a meeting till 3.30 am on Tuesday at a stretch.
We met the President, the Prime Minister, one time Finance Minister Ronnie de Mel and former President Chandrika Bandaranaike Kumaratunga.
Q You will be presenting the annual budget to Parliament soon, what is the overall plan for the next year?
We have given an Appropriation Bill. It outlines the total nett burrowing intended to be raised. Then, we will basically put forward the budget proposals. In that, you would see the areas where there are reductions which will be compensated. Don’t look at a sideshow! Look at the main show!
Q Can you broadly outline what you do?
This time, we are giving a lot of emphasis on employment creation, export growth, infrastructure, agriculture, housing, roads, water projects and all of them. You will be surprised when you see the budget.
Q What are the reforms you expect in the agriculture sector?
We are basically looking at the commercialization of it. That is the modernization of it. We look at the introduction of high yielding crops. That is a way forward in the economy.
"We increased their salaries substantially. We gave them Rs.10, 000. What is given is given. We have given them what they did not get for more than 10 years under the Rajapaksa rule"
Q In the last budget, some revenue proposals were negated due to alterations in the process. What is the shortfall of revenue?
We have a surplus. We have cut down the expenditure. We have increased revenue even though the minor opposition stymies it. We have steered the economy because we instilled fiscal discipline. There is criticism in the media on customs and all. Certainly, we have given their capacity.
Q How do you intend to raise revenue further this year?
That is by making it smart collection. You do not tax and tax. People who pay taxes do it enough. There are 23 million people in the country. There are only 6,000 files registered for tax including those paying PAYE. This is absurd. Those are the areas we will look at. The tax basis will be broadened.
Q Does it mean that new taxes would be introduced...
Not like that. There is no necessity for it.
"What happened during the previous regime is that they borrowed at high interest rates, but with less rates of returns. Where is the gap? That is the corruption element"
Q Last time, there was a proposal to introduce the Super Gain Tax. Could you elaborate it?
It was only a temporary mechanism. It was intended for a period. We inherited a mess from the previous regime. In order to get our political proposals to place, we brought it. That’s all. The Super Gain Tax will not come again.
Q What about the mansion tax you proposed earlier?
It will be coming up with the Capital Gain Tax.
Q It means the Capital Gains Tax is in the pipeline...
Q You have raised concerns about heavy borrowing by the previous government. The government says its revenue is hardly sufficient to pay back the loans obtained at that time. What is the policy of the new government on future borrowings?
Burrowing is an inevitable consequence. It is an inevitable happening. But, when we borrow, we have to look at the cost benefit. That has to be considered in opting for borrowings. What happened during the previous regime was that they borrowed at high interest rates, but with less rates of returns. Where is the gap? That is the corruption element. We have abolished it under the current rule of President Maithripala Sirisena and Premier Ranil Wickremesinghe. We are getting the economy into proper order. That is happening step by step. We will show you in the budget how we are going to raise revenue without impact on people.
Q You have already faced heavy criticism on VAT (Amendment) Bill that was passed in Parliament recently. What are your views?
That is a hysteria created by the media. You all listen to somebody and write basically exaggerating. At the end of day, you reported saying that the Supreme Court rejected it. But, the Supreme Court only rejected the manner in which we brought it in. We brought it properly after that with the Cabinet approval signified to Parliament. We bring this reluctantly. We want to make sure that we reduce it as soon as possible. This is an increase being made for the sins committed by the last government. We will do away with it as soon as we get over the current problem.
Q How long would it take for you to do it?
You mean, the crisis situation? The major crisis is over. But debt remains debt.
"This time, we are giving a lot of emphasis on employment creation, export growth, infrastructure, agriculture, housing, roads, water projects and all of them"
Q Actually, the rupee value of debt increased because the local currency depreciated after the new government came in. What are your views on this?
There is nothing to do with the rupee drop. The last government artificially kept the rupee. We removed such artificial interference. That’s all.
Q What are the plans for reforming the public sector?
Smart decision-making, digitalization are being planned. We will ensure that government servants are target-oriented. We will be introducing new legislation to that effect.
Q Any pay hike for public servants on the cards...
We increased their salaries substantially. We gave them Rs.10, 000. What is given is given. We have given them what they did not get for more than 10 years under the Rajapaksa rule. We gave it in the first 100 days of our government.
Q But, there is an agreement to add this to the basic salary in installments. Would you proceed with it?
That is what we have promised.
Q What are the plans for stabilizing the exchange value?
We will outline all in the budget.