Sri Lanka counts cost of war with new budget

Nov 6, 2007 (AFP) – Sri Lanka is expected to unveil its biggest ever war budget this week, as a government military campaign to crush the Tamil Tiger rebels takes a heavy toll on the island’s balance sheet. The government plans to increase defence spending by 20 percent to a record 1.45 billion dollars in 2008, raising fears of higher corporate taxes and further cuts in development projects, officials and analysts said.

Part of the increased defence budget, which accounts for about a fifth of Sri Lanka’s 27 billion dollar economy, is expected to be used to replace weapons and equipment destroyed during recent heavy fighting.

“About four million dollars a day is spent on military related expenses. Quite high for a little country like ours,” said economist Muttukrishna Sarvananthan, a consultant to the World Bank.

The government last month had raised 500 million dollars by selling a five-year bond, ostensibly to pay for infrastructure projects.

But critics say the government may now be forced to spend the money on replacing military hardware, after the Tigers last month staged a daring attack that wiped out an entire fleet of spy planes and other aircraft.

Air force chief Roshan Goone