2026 Budget: An opportunity lost?

THE NPP Government’s second Budget was a unique opportunity to make innovative public policy. Sadly, the opportunity may be missed. But there still is time.

- By Prof. Rohan Samarajiva

The Public Financial Management Act (PFMA), No. 44 of 2024, which extends the revenue and expenditure limits of 15.3% and 13% of GDP, respectively, beyond the duration of the Extended Fund Facility constitutes a disciplinary framework. Our Budget makers are not used to this kind of discipline. But such limits will keep us safe from the pain of a second default. Embracing them can also unleash our creativity.

The options of walking away from the IMF agreement, as President Gotabaya did in 2019, and rescinding or amending the PFMA, for which the NPP has the votes, exist. But in our current circumstances the price that would have to be paid for either action would be excessive.

The problem

It is broadly accepted that the people of this country paid a high price for the economic recovery. The micro and small enterprises that went out of business have not come back. The near-poor who got thrown into poverty are still below the poverty line.

Those whose professions allowed them to increase their incomes, ranging from doctors in private practice to plumbers, have done so. But the lost purchasing power of estate workers and Government employees has not yet been regained.