Sri Lanka Budget Approved: 5% Growth Target, IMF Reforms

Colombo, Feb 25 (PTI) The first full-year budget presented by the National People's Power (NPP) government, which came to power in November last year, was approved by the parliament on Tuesday.

The government's 2025 budget was approved with 155 votes for and 46 against, speaker of parliament Jagath Wickremaratna announced after the vote was taken after a week's debate on the second reading of the budget.

The Sri Lankan economy is expected to grow at 5 per cent in 2025, President Anura Dissanayake -- who is also the Finance Minister -- had said on February 17 while presenting the budget and added that the budget is a “reflection of the government's approach to building the economy and overall policy.”

On Tuesday, the leader of the House of parliament and minister Bimal Rathnayaka countered criticism of the budget.

He said the budget was able to cater to many deprived sections of the society. “The opposition criticisms were baseless, they were trying to blame us for presenting an International Monetary Fund (IMF) budget,” Rathnayaka said.

As the Budget 2025's Second Reading got underway last week, the government and the opposition debated if it was a people-friendly budget or, what local media quoted opposition leaders as saying, IMF-friendly.

Rathnayaka said research findings have shown that the NPP government has maintained the economy well.

President Dissanayake on the budget presentation day, said it was aimed at gearing Sri Lanka to meet its requirement to pay external loans from 2028.

He said a five per cent growth target was achievable for 2025 while maintaining the IMF reform led revenue targets.

Dissanayake also said a budget deficit of 6.7 per cent of the GDP or SLR 2.2 trillion was expected in 2025, down from the previous year's 6.8 per cent.

In line with the IMF programme targets, tax revenue is expected to be increased to 15 per cent of the GDP in 2025, he said.

Since the IMF and Sri Lanka entered a USD 2.9 billion bailout in March 2022, three tranches of over USD 330 million have been disbursed. The fourth tranche of the four-year facility is expected to be materialised soon after the IMF executive board's approval.

Sri Lanka had plunged into an economic crisis when the island nation declared sovereign default in mid-April of 2022, its first since gaining independence from Britain in 1948. Almost civil-war-like conditions and months of public protests led to the fleeing of the then president Gotabaya Rajapaksa.

Ranil Wickremesinghe, who took over as the president, negotiated with the IMF soon after and clinched the bailout in March 2023. The 2022 economic crisis is said to be the trigger for the NPP, which was until then a distant third force in local politics and in 2024 gained the biggest ever win for any party in parliamentary elections in independent Sri Lanka.