Sri Lanka’s Budget 2007 to focus on infrastructure, generate more savings; Treasury

October 14, 2006 (LBO) – Sri Lanka’s President Mahinda Rajapakse is due to present the 2007 budget on Nov. 14, which will focus on infrastructure and measures to generate more savings, the finance ministry said Saturday. “The importance of tax payer contributions towards country’s development efforts, suggestions to improve the tax system and taxpayer concerns was discussed,” the statement added. Prime Minister Ratnasiri Wickremanayake presented the budget appropriation bill on Oct. 5, which highlighted that total government spending will climb 42 percent to 804.6 billion rupees from 568.3 billion rupees in 2006.

Military spending will jump 45 percent to 139.55 billion rupees next year from an estimate of 96.21 billion rupees in 2006.

The military’s capital spending, which reflects purchases of weapons and other equipment, jumped almost three-fold with the army, navy and the air force budgets leaping while police capital spending showed a decline.

Overall borrowing programme will expand by nearly 30 percent to 694.7 billion rupees, as authorities leans further on foreign debt, rupee loans and government bonds. The programme excludes 300 billion rupee ceiling set for borrowings through treasury bills.

The appropriation bill does not include revenue estimates, but Rajapakse, who is also the country’s finance minister, will disclose the details in his budget speech.

Sri Lanka is hoping to contain its budget deficit to eight percent, Treasury Secretary P B Jayasundara said.

“The emphasis of next year’s Budget is on accelerated development of infrastructure, human resource development and expansion of regional development while also ensuring measures towards generating fiscal savings,” the finance ministry said.

The ministry also sought views from the public, trade chambers and professionals on how to structure next year’s budget.

“So far, around 650 suggestions have being received and they are being studied by the technical experts.”

Rajapakse and his budget making team also met a cross section of political parties, trade unions, trade chambers, film artists, medical professionals, pettah traders and representatives from key industries like clothing, construction, tea, transport, legal and agriculture.

He also met tax experts and some taxpayers who carry a Gold Cards issued by the Inland Revenue Dept for paying their taxes on time.