2021 Budget Speech

Prime Minister and Minister of Finance Mahinda Rajapaksa commenced delivering the 2021 budget speech at the Parliament of Sri Lanka.

05:01 PM – Business activity in the Colombo Port City Special Economic Zone to commence in 2021. A new legal framework to monitor these business activities to be tabled in January.

05:00 PM – Rs. 3000 million allocated for local government to prevent waste dumping in forests and protected nature reserves.

04:55 PM – Rs. 3,000 help mitigate the Human Elephant Conflict by encouraging community participation. PM notes that measures to help protect elephant corridors also included in this programme.

04:51 PM – Rs. 5,000 million is allocated to improve rural hospitals, dispensaries, and maternal clinics. An allocation of Rs. 3,000 million will be available to provide the required teachers and basic facilities to the rural schools, along with the 1,000 National School Development Programme to be implemented at the Divisional Secretariat level.

04:46 PM – He proposes to allocate additional funds of Rs. 5,000 million to develop water resources and reservoirs in line with the programme to provide drinking water to 200,000 families during 2021.

04:43 PM – The compulsory retirement age for the public sector is 60 years, whereas it is 50 years for the private sector. Therefore, based on the life expectancy, it is proposed to amend the Employees’ Provident Fund Act to expand the retirement age for both men and women up to 60 years.

04:40 PM – It is proposed to strengthen the surveillance by the Sri Lanka Air Force to prevent illegal deforestation. The identified deforested lands will be reforested with the assistance of the Sri Lanka Air Force. Rs. 3,500 million is proposed to be allocate for the accelerated forestation programme during 2021-2023.

04:39 PM – More than 30 per cent of Sri Lankan population reside in river valleys and catchment areas. PM proposes measures in order to protect natural waterways and to curb action such as illicit sand dredging.

04:37 PM – I propose to ban the usage of single use polythene and plastics with effect from 01 January 2021 to ensure the management of polythene and plastic waste in an environmentally sensitive manner.

04:33 PM – Permission will be granted for non-executive office employees of the public service to engage in other jobs or employment after office hours and those who seek foreign employment will be granted leave for two years. I propose to reduce the maximum interest charged on housing and property loans of public servants granted by banks under housing loans and advances up to a maximum of 7 percent.

04:31 PM – PM proposes amendments to the Finance Act to alleviate employement issues.

04:29 PM – The government will not succumb to privatisation of state services, PM stressed. Proposes legal reforms to make way for financial independence of state institutions.

04:28 PM – Delays in judicial system to be addressed through special reforms. Rs. 20,000 million to be allocated for judicial services, with special focus on expanding the judicial workforce and physical infrastructure.

04:26 PM – Banks and Financial Institutions to be strengthened through special government initiatives.

04:21 PM – Construction of 50,000 houses already underway under the Urban Development Authority. A 25 year loan with an interest rate of 6.25% to be granted for applicants of these state housing projects

04:20 PM – Housing facilities in Colombo’s suburbs and main cities in Sri Lanka to be improved. Maintenance and Waste Management to be given special attention.

04:17 PM – I propose to reduce the import taxes levied on vehicle spare parts required for new production sectors to incentivize entrepreneurs in automobile industries engaged in vehicle repairing and vehicle assembly. Further, it is proposed to develop railway compartment production as a domestic industry.

04:16 PM – Reforms proposed for the foreign service. Bilateral agreements to be reviewed, in order to ensure national security and Sri Lanka’s non-alligned stance. Diplomats and foreign service officers will therefore be assessed under the new reforms.

04:14 PM – Tax relief proposed for textile and hide manufacturers. Gem businesses to be granted a three year tax relief period.

04:09 PM – Investments of a trillion rupees have been planned to initiate 1000 community water projects aiming to provide drinking water to the whole country between 2021 and 2024.

04:07 PM – Local agriculture inputs and products to be promoted, eliminating the need for agricultural imports.

04:06 PM – CESS tax to be levied to secure local industries.

04:00 PM – He also proposes to provide solar panels of 5 kilo watts to 100,000 houses of low income families under Asian Development Banks and Indian loan scheme. Loan of 4 per cent interest rate will be provided to low income families for this.

03:56 PM – Electricity consumers to be assured a sustainable and renewable energy supply by 2023. 70 per cent of Sri Lanka’s energy supply to be sourced from renewable energy sources by 2023.

03:52 PM – Lakvijaya and Kerawalapitiya Power Plants to be strenghtened in order to gaurantee interuption free power supply through years 2021-2022. One coal power plant of 300 MW and two LNG plants to be added to the national power grid. Kerawalapitiya to be transformed to a LNG plant.

03:49 PM – Construction of the national expressway network to be expedited. Colombo’s Marine Drive to be extended to Moratuwa. 25 districts to be covered under a three year programme to develope road infrastructure. Railway network including Colombo and Kelani Valley to be expanded. Rs. million 1300 to be invested in this regard.

03:47 PM – I also propose to increase the daily wage of plantation workers to Rs. 1,000 from January 2021. I intend to present to Parliament in January a legal framework that will change the management agreements of plantation companies that are unable to pay this salary and provide opportunities for companies with successful business plans.

03:43 PM – He also assures to implement the contributory pension scheme for Sri Lankan foerign employees.

03:42 PM – In addition to the prevailing currency rates, he proposes to pay extra Rs. 2 per dollar sent by Sri lankans emplpoyed overseas.

03:39 PM – Rs. 150 million allocated for local fisheries development.

03:37 PM – Rs. 55 billion spent annually for dairy imports. Government proposes to direct this expenditure towards development of domestic agriculture and animal husbandry. Importing milch cows and cultivating cattle feed locally among measures proposed by the Budget. A loan up to Rs. 500,000 proposed for development of dairy farming.

03:32 PM – Prime Minister proposes to allocate adittional funds of Rs. 250 million to develop basic infrastructure of temples in rural areas.

03:28 PM – Measures proposed to minimize taxes levied by local government bodies from tourism related business.

03:27 PM – A 50 per cent income tax exemption for local companies if they register before December 31 2020, to be listed in the Central Stock Exchange.

03:25 PM – I propose to allocate additional provisions amounting to Rs. 2,000 million as the initial investment out of the larger medium term investments to be made during 2021-2024 aimed at establishing a sports complex for the 2032 Olympics, expansion of female participation, in national and international sports events and establishing a sports economy of USD 1,000 million by 2025.

03:24 PM – Rs. 10,000 million to be allocated for new technical colleges to be established in Colombo, Kalutara, Kandy, Anuradhapura and Batticaloa.

02:51 PM – Proposes measures to increase female participation in national sports.

02:50 PM – New city universities to be established in each district to cater to students pursuing popular subjects.

02:49 PM – A 5 year grace period for tax levied from Vocational Training Centres, which are able to double their annual intake of students.

02:46 PM – A loan of 500,000 as start-up capital with a grace period of 5 years to be introduced for entrepreneurs. A commitment fee of 0.25 per cent proposed to be levied from loan applicants to ensure that the funds are managed and utilized accordingly.

02:44 PM – He proposes to allocate additional funds of Rs. 3,000 million to intitiate a scholarship programme to provide Rs. 4,000 monthly allowance to students recieving vocational education based on their active participation.

02:39 PM – Technical colleges of which the annual intake is presently at 100,000 to be increased to 200,000 students per year.

02:37 PM – Companies with more than 50 employees must introduce an insurance scheme for its workers. The contribution of the employer would be 0.25 per cent.

02:35 PM – A new investment zone to be introduced for local and foreign investors.

02:34 PM – Rs. 1,500 million to be allocated to increase production of Thriposha.

02:33 PM – Proposes measures to improve the State Pharmaceutical Cooperations production capacity.

02:32 PM – He proposes to allocate additional funds of Rs. 20,000 million to tri-forces to develop infrastructure and short-term machinery to assist their various tasks including dissaster management.

02:31 PM – Investment of Rs. 15,000 million allocated for the Telecom Development Fund. The project will be implemented in 2020-2022. Mobile and fixed broadband services to be covered under this project island-wide. This will support fibre installations required by service providers, and also focus on local industries when obtaining resources.

02:25 PM – Rs. 750 million to be allocated for housing, health, education and entrepreneurship needs of retired, injured or deceased military servants through the Ranaviru Seva Authority.

02:21 PM – Commodity trading hub to be implemented to aid activities at Colombo and Hambantota ports.

02:19 PM – Sri Lankans living abroad would be permitted to purchase luxury apartments with several new measures to be introduced.

02:18 PM – He proposes to intorduce special goods and services tax on cigerrete , gaming, tele-communication and mortor vehicles which contribute more than 50 per cent of the tax revenue.

02:17 PM – A new loan scheme proposed for Samurdhi beneficiaries on 7 per cent interest.

02:13 PM – New laws to discourage and punish tax officers who aid in tabling fraudulent tax accounts. Proposes changes to the Inland Revenue Department to encourage tax auditing.

02:12 PM – A special Court of Appeal to hear public complaints pertaining to tax.

02:10 PM – The government to introduce a separate common tax for goods and services which contribute over 50% to the national tax revenue.

02:08 PM – The current 8% VAT will continue for business which earn a monthly income of more than Rs. 25 million.

02:04 PM – Government projects have been stalled due to the need to allocate funds to repay foreign debt, he adds. 65 per cent of foreign loans to be utilized for develeopment initiatives within the country, with the exception of technical developments.

02:03 PM – PM highlights the need to alleviate poverty and increase social welfare measures.

02:02 PM – National debt which is at 90 per cent must be reduced to 70 per cent, PM stressed.

02:00 PM – Government service must be encouraged, recommends action to reduce cost and improve productivity. Condemns the previous government for political victimization of government employees, instead encourages their service, PM notes.

01:56 PM – Small scale businessmen who have been affected by Covid-19 must be encouraged to contribute to national production, through which the current import based economy can be changed, PM said.

01:55 PM – Highlihgts the need for the creation of a knowledge based economy, the need to encourage sports especially among the young generation. The Prime Minister also notes that reforms in education are required to address issues especially among unemployed youth.

01:55 PM – Prime Minsiter notes the government’s objectives of ensuring a free and improved health service to combat Covid-19 and Non-Communicable diseases, in his budget speech.

01:46 PM – Prime Minister Mahinda Rajapaksa enters parliament to table the Budget for 2021 in his capacity as Finance Minister.

Full Budget speech