Public Report on the 2022 Budget: Assessment of the Fiscal, Financial and Economic Assumptions Used in the Budget Estimates

Abstract

The 2022 budget was presented to the parliament on November 12, 2021, outlining the government’s proposals to raise public funds through taxation and proposals for expenditure during the year. These proposals form the framework of the executive management of public finance. Therefore, it is in the public’s best interest to subject to objective and vigorous analysis, the assumptions and estimates used to arrive at the said proposals. This is a public report compiled by Verité Research and it shares the same objective as the parliamentary Committee on Public Finance (COPF). It provides an assessment and analysis of the financial, economic and fiscal estimates and assumptions applied in the budget. It aims to inform a wider audience of stakeholders, including the COPF and parliament. Verité expects that the contents of this report can improve informed engagement, in parliament and amongst the general public, with Sri Lanka’s annual budget. The report was based on four sources: (1) Numbers provided in the budget speech for 2022 presented in parliament on November 12, 2021; (2) Draft budget estimates for 2022 provided to the parliament on November 12, 2021; (3) Fiscal Management Report for 2022 provided to the parliament on November 12, 2021 and (4) Central Bank of Sri Lanka (CBSL) annual report. The analysis considers the macro-economic framework (relating to inflation, interest rates, fiscal deficits, exchange rates, GDP growth, debt management and fiscal deficits) and economic assumptions of the government, where those assumptions have been identified. In addition to informing the public and other stakeholders including the executive and the parliament, this assessment also contributes to improving access to crucial information and professionalising the process by which budget estimates are constructed. In the medium term, this is expected to result in better-formulated budgets to improve public finance outcomes in Sri Lanka.