Scary Budget…

Defense spending was hiked by a massive Rs. 25 billion from the levels proposed a month ago as top Generals said they are ready for war if pushed in to it. Defense spending was hiked by a massive Rs. 25 billion from the levels proposed a month ago as top Generals said they are ready for war if pushed in to it. Defense spending was budgeted at Rs. 96 billion up from a proposed Rs. 70 billion in the first estimates presented for this year in November.

The spend is the highest proposed for defense in absolute terms and accounts for around 4.5 percent of GDP.

Government’s defense spending will be Rs. 96 billion for next year although the President in the second reading of the budget did not mention defense at all.

Spending is up Rs. 26 billion from the Rs. 70 billion proposed when former Finance Minister presented a budget only a month ago.

According to the appropriation bill presented just before the second reading of the budget by the President government plans to spend Rs. 83.8 billion on recurrent defense spending and Rs. 12.4 billion on capital spending for defense.

Government budgeted Rs. 62 billion for security related spending this year -the highest in the last five years.

Defense spending has remained flat in the last five years after LTTE entered into a ceasefire agreement with the government averaging around 3 percent of GDP a year when total government spending averaged around 25 percent of GDP.

For next year the government expects total expenditure at 27.5 percent of GDP or at Rs. 730 billion or so with defense accounting for around 4.5 percent of that.

During times of war Sri Lanka has spent proportionately higher amounts on defense going up to 6 percent of GDP by sacrificing public investment.

Analysts say the significant increase on security spending could be a way of maintaining the balance of power in the peace process.

If LTTE knows that the security forces are well equipped they will think twice about getting in to war.

Higher spending could also mean that government is getting ready for a war.

Thirty one people were killed in a wave of attacks in last couple of weeks in what analysts termed was a serious test of the Ceasefire Agreement (CFA) signed in 2002.

Many of these attacks targeted Sri Lankan army personnel in the Jaffna peninsula.

Government could be sending a signal to LTTE that it is investing more in security to meet any challenge.

Tamil National Alliance (TNA) parliamentarians who hold similar views to those of the LTTE have criticized higher defense spending.

The government’s decision to increase defense allocations also goes against its stated policies.

In a mandatory pre-budget announcement under the Fiscal Responsibility Act released on Thursday, the day of the budget, it says defense spending will be contained at around 2.5 percent of GDP.

It has however over shot the target by a full 2 percentage points or around Rs. 42 billion for next year.

If it kept to the target next year’s security spending would have been Rs. 54 billion and not Rs. 96 billion as announced in the budget.

The top commander in charge of the armed forces says security forces are being provoked in the north and east.

The top brass said this week they are ready to meet any challenge after 31 people were killed in a couple of bloody weeks in the north and east.
“We will ensure whatever challenges will be met,” says Admiral Daya Sandagiri.

Chief of Defense Staff.

Military analysts believe the LTTE has used the time during the ceasefire to strengthen its numbers and better equip itself. The LTTE is now known to have air capability.

-LBR Newsdesk: LBOEmail@vanguardlk.com