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Wobbly start for Sri Lanka’s 2006 budget presentation

Sri Lanka's annual budget presentation got off to an inauspicious start with the main opposition party boycotting the proceeding, while government benches were half empty. Sri Lanka's annual budget presentation got off to an inauspicious start with the main opposition party boycotting the proceeding, while government benches were half empty. Finance Minister Sarath Amunugama began his customary budget speech around 2.15 pm local time – ahead of the auspicious 2.30 pm, saying the country was poised to take off on a six percent growth plane

Amunugama started his innings amidst a half empty house, with the opposition citing the budget as a mere academicals exercise.

"It was a sudden decision to boycott the budget, as there is no debate before the Presidential election next week," UNP parliamentarian Rajitha Senerath said.

However, Amunugama waxed eloquently on President Chandrika Kumaratunga's final term of office saying her tough policies helped raise tax/GDP ratio to 14.7 percent in 2005 (over 13.9 percent in 2004).

"As at September 2005, revenue from income tax has grown by 31 percent, VAT by 19 percent, import duty by 14 percent and excise duty by 12 percent, contributing to a 21 percent overall growth in tax revenue," Amunugama told legislators on Tuesday.

Despite generous handouts through fertilizer subsidies, pay hikes for public servants and absorbing 42,000 unemployed graduates into the public sector, the government has cut its revenue deficit to 2.8 percent this year (from 3.9 percent in 2004).

The Indian Ocean island had spent Rs. 13.3 billion on tsunami related costs, after giant tidal waves washed away key infrastructure along its shorelines last Dec.

"Therefore, the overall budget deficit at 8.2 percent of GDP exceeded only by 0.7percent over the targeted deficit of 7.5 percent," Amunugama said.

He said remittances from overseas employment rose 21 percent to US$ 1.5 billion, partly due to locals sending money for tsunami hit families.

A cocktail of debt relief, tsunami aid and foreign remittances helped swell official country reserves to US.
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7 billion as of September 2005.

-LBO Newsdesk: LBOEmail@vanguardlk.com

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