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* Sri Lanka budget aims to elevate country to upper middle income status by 2016
Thu, Nov 8, 2012, 09:17 pm SL Time, ColomboPage News Desk, Sri Lanka.

Nov 08, Colombo: Sri Lankan President Mahinda Rajapaksa in his capacity as the Minister of Finance and Planning presented the 2013 budget in the parliament today.

Presenting his 8th budget, the President said the government's aim is to transform Sri Lanka as an upper middle income country by reaching a Per Capita income of US$ 4,000 and US$ 100 billion GDP by 2016.

In the path to achieve the high economic growth, however difficult, it is essential to take corrective measures in response to imbalances in the export and import trade, the President said pointing out that there are limitations in subsidizing high oil prices and a danger in relying on oil based power generation strategies.

"Corrective measures required to be taken to address these challenges are politically difficult but as a responsible Government we need to take such measures, in the interest of financial stability and development," the President emphasized.

The President also highlighted that overall growth strategy is to achieve a gradual increase in the investment level in excess of 35 percent of GDP.

He pointed out that Sri Lanka this year had a satisfactory growth of around 6.8 percent due to the resilience in the export economy, construction industry and service sector activities despite setbacks in the Yala harvest and hydropower generation.

The Budget Deficit in 2012 has been kept at 6.2 percent of GDP and Government Debt is likely to remain at around 80 percent of GDP as in 2011.

The 2013 Budget has been formualted to ensure that the economy will bounce back at an average growth rate of 7.5 percent in 2013 and 8 percent thereafter with a moderate inflation at around 7 percent.

The underlying fiscal strategy will contribute to a Budget deficit of 5.8 percent in 2013 and move towards a deficit of 4.5 percent by 2015, with public debt below 75 percent of GDP, the President predicted.

The implementation of reconciliation initiatives identified by the Presidential Task Force based on the Lesson Learnt and Reconciliation Commission (LLRC) Report has been given highest priority in the 2013 budget.

The initiatives to promote a trilingual Sri Lanka, social integration programmes, rehabilitation and reintegration of ex-combatants, issuance of land title documents and resolution of land related issues, providing housing needs and strengthening local authorities and public services in these areas have also been given high priority. The budget has allocated Rs. 763 million for those initiatives and has proposed a further supplementary provision of Rs. 500 million to fast track the process.

The uplifting of poor people in villages has been a focus in the budget. The budget has allocated Rs. 1.5 billion to intensify poverty reduction initiatives targeting the poor. Housing facilities for poor people in each village, development of isolated rural schools to create a child friendly school environment and provide meals free of charge for each child attending such schools have been proposed to ensure 100 percent primary school enrolment throughout the country.

The President invited the business community, banking and financial institutions, tourist hotels, plantation companies and large industrial establishments to participate in the national effort for poverty reduction by implementing special programs, and fulfill their corporate social responsibility.

Some of the 2013 Budget highlights:

  • Education sector allocated 4.1% of GDP - Rs 306 billion.
  • Monthly allowance of minimum Rs 1,500 for every public servant which includes Rs 750 as Cost of Living allowance.
  • Rs.1 billion for three year housing loan scheme for security forces personnel.
  • Increase in guaranteed price for paddy to Rs.35 and Rs.37 per kg.
  • Heavy tax on Imported milk powder.
  • Allocation for research for university academics and medical professionals increased by Rs 250 million.
  • Airport tax and online visa tax will be increased by 10% and 5 % respectively.
  • Taxes on imported liquor will be increased by 25%.
  • Rs. 200 million to implement the interest free loan to journalists and artistes in 2013.
  • Rs. 126 billion to provide drinking water facilities to 1.58 million families in various districts including North and east.
  • Increase subsidy to tea small holders from Rs.300,000 to Rs.350,000 per hectare.
  • Rs 300 million to improve indigenous medicinal systems.
  • Increase in the fee on Motor vehicle revenue license from 2013.
  • Rs. 100 million allocated to support media involved in tourism coverage.
  • Rs. 900 million for Provincial Teacher Training.
  • Urban housing allocation increased to Rs. 750 million

Full Budget Speech

(Photos by Sudath Silva)

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