- PM presents Budget this afternoon
- Private sector expects support for local industries, exports and SMEs, public hopeful of relief
- Public galleries open only to diplomats, media gallery closed for 3rd week in a row
- Govt. expenditure for 2021 estimated at Rs. 2.6 t, limit on borrowings set at Rs. 2.9 t
- Debate on Appropriation Bill will last 21 days, with second reading vote on 21 Nov., and third reading on 3 Dec.
By Chandani Kirinde
Prime Minister and Minister of Finance Mahinda Rajapaksa will present the new Government’s first budget to Parliament at 1:40 p.m. today.
Prime Minister and Minister of Finance Mahinda Rajapaksa
The private sector is hoping that the Budget 2021 will provide clear-cut policies as well as tax and other support for small and medium enterprises (SMEs), particularly those targeted at import substitution. Ahead of the Budget presentation, key Government officials had indicated the Budget would also be focused on boosting market confidence with pro-business policies to turnaround sluggish growth in the economy and help contain the impact of COVID-19.
At least some fiscal consolidation measures will also be needed to assist the Government to raise much-needed funding to bolster reserves and repay an estimated $4.5 billion debt in 2021.
The public will be hoping for more social welfare measures after a resurgent virus in recent weeks impacted livelihoods.
It will be a low-key Budget presentation with only members of the diplomatic corps invited to the public gallery, while the media gallery will remain closed for the third week in a row due to fears over the spread of COVID-19.
The post Budget tea party this year will also be limited to Members of Parliament (MPs) and the members of the diplomatic corps, a deviation of the usual practice where a large numbers of invitees including public officials and media personnel also attend the event.
It will be the country’s 75th budget to be presented to Parliament with the country’s first Budget presented in December 1947. The Appropriation Bill for 2020 was presented to Parliament on 20 October.
Government expenditure for the year 2021 has been estimated at Rs. 2,678 billion with the highest allocations for the Ministries of Defence, Highways and Provincial Councils according to the Appropriation Bill 2021.
Separate allocations have been made for State ministries in the Budget, with those related to the agriculture and rural development sectors getting the bulk of the allocations along with the highways and road development sector.
Of the total of approximately Rs. 2,678 billion (Rs. 2,678,040,000,000) estimated for the service of the period beginning on 1 January 2021 and ending on 31 December 2021, Rs. 1,714,301,178,000 is for recurrent expenditure, while Rs. 963,738,822,000 will be for capital expenditure.
The expenditure will be met from payments which are authorised to be made out of the Consolidated Fund or any other fund or moneys of, or at the disposal of the Government and from borrowing made in the financial year 2021.
The debate on the Bill will commence from 18 November (Wednesday) and will continue till 10 December. The vote on the Second Reading of the Bill is scheduled for 21 November and the final vote fixed for 10 December.
Investors at CSE subdued ahead of today’s Budget
Investors in the Colombo stock market were subdued yesterday in anticipation of the 2021 Budget to be presented in Parliament today.
Both indices fell, with ASPI down over 5 points and S&PSL20 down by over 14 points whilst turnover was below par at Rs. 1.4 billion.
“Investors stood by the sidelines, ahead of the 2021 Budget reading, fueling the downfall of the market for the third consecutive session,” First Capital said.
It said index experienced a gradual downward movement since the beginning of the session as it hit its intraday low of 6,065 during mid-day. Later market experienced a slight uptrend and closed at 6,077 losing 6 points.
Turnover for the session was led by the Capital Goods sector, closely followed by the Materials and Food and Beverage sectors, making a combined contribution of 59%. Moreover parcel trades boosted the turnover for the session amounting to 14%.
First Capital also said the market completed four weeks of continuous net foreign outflow while recording low participation. Net foreign selling was Rs. 26 million, low in comparison to Rs. 133 million on Friday.
NDB Securities said the ASPI edged down as a result of price losses in counters such as Richard Pieris & Company, Sri Lanka Telecom and Ceylon Cold Stores.
It said high net worth and institutional investor participation was noted in Ceylon Tobacco Company, Richard Pieris and Company, and Aitken Spence.
Mixed interest was observed in Sampath Bank, Hemas Holdings and Dipped Products, whilst retail interest was noted in Expolanka Holdings and Tokyo Cement Company non-voting and voting.
The Capital Goods sector was the top contributor to the market turnover (due to Hemas Holdings), whilst the sector index lost 0.19%. The share price of Hemas Holdings gained Rs. 2.70 (3.53%), closing at Rs. 79.10, whilst foreign holdings decreased by 1,249,904 shares.
Materials sector was the second highest contributor to the market turnover (due to Dipped Products), whilst the sector index edged up by 0.03%. The share price of Dipped Products recorded a loss of Rs. 1 (0.31%) to close at Rs. 323.10.
Expolanka Holdings, Sampath Bank and Ceylon Tobacco Company were also included amongst the top turnover contributors. The share price of Expolanka Holdings increased by Rs. 0.30 (1.17%) to close at Rs. 26. Moreover, the share price of Sampath Bank moved down by Rs. 0.60 (0.48%) to close at Rs. 124.40, whilst the share price of Ceylon Tobacco Company declined by Rs. 5.30 (0.55%) to close at Rs. 960. Separately, Asia Siyaka Commodities announced an interim dividend of Rs. 0.05 per share.