Sri Lankan President Ranil Wickremesinghe on Monday presented his government’s 2024 budget, emphasising the need for tough reforms until the full recovery of the cash-strapped island nation’s economy. Although Sri Lanka has managed to control its hyperinflation in the ongoing economic crisis, its economy is far from being fully recovered.

"We have been able to put back on the rails the derailed economy. Still, people undergo suffering," Wickremesinghe, who is also the Finance Minister, said. The inflation which was 70% in September 2022 has been reduced to 1.5% in October this year," the minister said.

He said in order for the island nation to prevent another bankruptcy, hard reforms are a must. The state banks were made to fund the losses of state enterprises. He proposed that two state banks’ shares be issued to the public and investors while the government would inject cash into the state banks to maintain their stability.

Wickremesinghe said the cost of living allowances for 1.3 million state employees and pensioners numbering 700,000 would be raised by ₹10,000 and ₹3,000 respectively from 2024. The announcement came as state employees last week held street protests demanding a ₹20,000 wage hike.

He said the government could no longer print money or get external borrowings for state expenditure. Wickremesinghe blamed the political trade union for protests against investment projects such as the Trincomalee oil tanks farm development with India.

A special presidential task force would see the development of the entire Trincomalee district with the Indian side, he said. Highlighting the revenue shortfall, Wickremesinghe said there remains a monthly state expenditure deficit of rupees 168 billion with the government having to pay 220 billion as loan interest.

The revenue shortfall was one of the key factors mentioned in the International Monetary Fund’s first review of its 2.9 billion dollar bailout. The budget speech made no reference to when the second tranche of the IMF four-year bailout would be forthcoming.

Wickremesinghe said this budget was not a 2024 election budget as no popular handouts were announced. The next presidential election must be called by mid-September of 2024 and be held before the end of November.