Sri Lanka likely to up welfare spending in budget

Sri Lanka’s government is likely to announce ambitious spending plans to help low-income groups and farmers when it presents its 2006 budget proposals next week, analysts say. Sri Lanka’s government is likely to announce ambitious spending plans to help low-income groups and farmers when it presents its 2006 budget proposals next week, analysts say. The ruling Sri Lanka Freedom Party is expected to increase welfare spending despite a large budget deficit. The party may use the Nov. 8 budget proposals to woo voters ahead of keenly fought presidential elections Nov. 17, they said.

“There will be welfare measures and populist measures included in the budget this year,” said Vajira Premawardhana, the head of research at Lanka Orix Securities.

The government is targeting a budget deficit of $1.6 billion, equivalent to 8.2% of gross domestic product, in 2006 compared with this year’s target between 8% and 8.5%.

This year’s budget deficit is likely to be similar to last year’s figure of 8.2% of GDP, despite heavy spending on reconstruction after the December tsunami.

Analysts said this was due to a one-year debt moratorium worth $500 million granted by fo