Sri Lanka to spend more than 0.5-pct of GDP on north rebuilding in 2010

Sept 24, 2009 (LBO) – Sri Lanka is expected to spend around 0.75 percent on reconstructing war-torn areas in the north and east in 2010, and it would be outside the program target agreed with the International Monetary Fund, an official said. A 20-month program agreed with the IMF in July 2008, set a target of 6.0 percent of gross domestic product for the budget deficit for 2010.

Reconstruction spending would come on top.

“At this point I can’t say for certain, but we think somewhere around one half to three quarter percent of GDP in 2010 would probably be in line with what would be consistent with the program,” IMF mission chief Brian Aitken told reporters in Colombo this week.

“And again it is too early to say because we will be evaluating this in more detail when we come back in November.”

A preliminary Treasury document on the upcoming budget set the deficit at 6.6 percent of GDP for 2010.

This year’s deficit target of 7.0 percent is inclusive of northern reconstruction. A 30-year war with Tamil Tiger separatists ended in May.

“There is no large project reconstruction spending disbursement this year,” Aitken said.

“Most of the reconstruction again is – as we’ve discussed with the government – based on