Sri Lanka peace dividend in low rates, higher capex: Treasury Secy

July 20, 2011 (LBO) – Sri Lanka is seeing a peace dividend in the form of lower interest rates, taxes, inflation and higher capital expenditure after a 30-year war ended, Treasury secretary P B Jayasundera said. He said defence expenditure which was about 5.0 percent of gross domestic product during the war years, has now dropped to 3.0 percent.

“We managed the budget under stress, because the country was at war,” Jayasundera told members of the Joint Apparel Association Forum, an industry body.

“So we had fairly high defence expenditure, sometimes as high as five percent of GDP. It has now dropped to three.”

Spending Trends

In 2010, defence spending fell to 190 billion rupees or 3.4 percent of GDP as the economy expanded compared to from 3.9 percent of GDP in 2009.

“So this number is going to go down, because we no longer spend money on aircraft, buying ammunition or military hardware,” Jayasundera said.

“Probably we have to build little bit capital stock to have fairly high tech security.

“But since there is no war threatening the existence of the country itself, we can have planned defence expenditure like any other country which will also be conducive for nationa