Sri Lanka’s new president move to roll back budget could scare off investor, undo fiscal discipline

The unprecedented move to roll back Sri Lanka’s budget for 2006 could scare off investors and undo fiscal discipline if new President Mahinda Rajapakse’s subsidy-laden manifesto is translated into action, analysts said. The unprecedented move to roll back Sri Lanka’s budget for 2006 could scare off investors and undo fiscal discipline if new President Mahinda Rajapakse’s subsidy-laden manifesto is translated into action, analysts said. Rajapakse, who narrowly scraped through in Thursday’s ballot after pledging to cut the prices of products ranging from milk powder to fertiliser, announced in his inaugural address to the nation that he will unveil a new budget shortly.

The tsunami-hit island is already creaking under the strain of high oil prices and double-digit inflation and his bundle of goodies comes with a US$ 50 million price tag – luxuries the war-torn country cant afford.

“I have decided to bring before parliament new budget proposals based on the ‘Mahinda Chintanaya’ (my philosophy),” he said after taking oaths as Sri Lanka’s fifth executive president. “I believe it is necessary to begin my term of office with the people’s confidence in me intact.”

Rajapakse, 60, who’s skills lie in building and man