Sri Lanka’s government hiked defence spending by 30% in its annual budget unveiled Tuesday amid a boycott by the main opposition which accused the ruling party of offering ‘carrots’ to the public just days ahead of a presidential election.
Sri Lanka is to spend almost 61 billion rupees on the military next year, a rise of 30%. Expenditure is to rise again in 2007 to almost 69 billion rupees and in 2008 to 74 billion rupees.
The spending, the government said, was for the ‘formulation, co-ordination and execution of policies with regard to defence and safeguarding the territorial integrity and sovereignty of Sri Lanka.’
Notably, amongst the rises, capital expenditure was expected to rise modestly (or in the Navy’s case, to fall substantially), suggesting the military expenditure is being underpinned by a major hike in salaries.
Sri Lanka’s Army is numerically the largest of the three services, with over 100,000 soldiers (the same size as Britain’s Army). The almost all-Sinhala army is drawn from the rural south. The Navy and Air Force are also overwhelmingly Sinhala.
The 2006 budget won’t face a parliamentary vote until after the November 17 poll to select the successor to President Chandrika Kumaratunga.
But it eased the tax burden on farmers, who make up a third of Sri Lanka’s 20 million people, and raised government salaries.
The government has exempted agriculture from income tax for five years and removed a 15 percent tax on farm exports.
The increased salaries to government employees will cost the government an additional 17.8 billion rupees, widening the government’s deficit to almost 9% of GDP.
The main opposition United National Party (UNP) charged that presenting the budget before the election gave an undue advantage to the ruling party candidate, Prime Minister Mahinda Rajapakse, who the UNP accused of offering ‘carrots’ to the masses.
Rajapakse, who has allied himself with Sinhala nationalist political parties has promised to halt privatisation. His rival, UNP leader Ranil Wickremesinghe, has vowed wide-scale market reforms and to revive stalled peace talks with the Liberation Tigers.
The UNP, along with its allies, the Ceylon Workers Congress (CWC), Upcountry Peoples Front (UPF) and Sri Lanka Muslim Congress (SLMC), boycotted the parliamentary session in protest.
The areas around the Sri Jayawardenepura Parliament complex was heavily guarded to prevent incidence of violence by potential protesters, TamilNet reported, adding it was the first time in Sri Lanka’s democratic history that a budget was presented without the presence of the main Opposition parties.
‘We will present a fresh budget after the election,’ vowed Mahinda Samarasinghe, an UNP lawmaker.
As part of its 2006 budget, Sri Lanka will restrict a costly fuel subsidy to a few groups and boost infrastructure development, AP quoted Finance Minister Sarath Amunugama as telling parliament.
The government will spend US$350 million (euro298 million) on building new roads across the island with donor funds, he said.
Amunugama said the government expects inflation to be under 8 percent in 2006, but didn’t elaborate. Higher global oil prices have put upward pressure on inflation which is expected to hit 10 percent this year, an increase of 2.4 percentage points from 2004.
Sri Lanka is to spend almost 61 billion rupees on the military next year, a rise of 30%. Expenditure is to rise again in 2007 to almost 69 billion rupees and in 2008 to 74 billion rupees.
The spending, the government said, was for the ‘formulation, co-ordination and execution of policies with regard to defence and safeguarding the territorial integrity and sovereignty of Sri Lanka.’
Notably, amongst the rises, capital expenditure was expected to rise modestly (or in the Navy’s case, to fall substantially), suggesting the military expenditure is being underpinned by a major hike in salaries.
Sri Lanka’s Army is numerically the largest of the three services, with over 100,000 soldiers (the same size as Britain’s Army). The almost all-Sinhala army is drawn from the rural south. The Navy and Air Force are also overwhelmingly Sinhala.
The 2006 budget won’t face a parliamentary vote until after the November 17 poll to select the successor to President Chandrika Kumaratunga.
But it eased the tax burden on farmers, who make up a third of Sri Lanka’s 20 million people, and raised government salaries.
The government has exempted agriculture from income tax for five years and removed a 15 percent tax on farm exports.
The increased salaries to government employees will cost the government an additional 17.8 billion rupees, widening the government’s deficit to almost 9% of GDP.
The main opposition United National Party (UNP) charged that presenting the budget before the election gave an undue advantage to the ruling party candidate, Prime Minister Mahinda Rajapakse, who the UNP accused of offering ‘carrots’ to the masses.
Rajapakse, who has allied himself with Sinhala nationalist political parties has promised to halt privatisation. His rival, UNP leader Ranil Wickremesinghe, has vowed wide-scale market reforms and to revive stalled peace talks with the Liberation Tigers.
The UNP, along with its allies, the Ceylon Workers Congress (CWC), Upcountry Peoples Front (UPF) and Sri Lanka Muslim Congress (SLMC), boycotted the parliamentary session in protest.
The areas around the Sri Jayawardenepura Parliament complex was heavily guarded to prevent incidence of violence by potential protesters, TamilNet reported, adding it was the first time in Sri Lanka’s democratic history that a budget was presented without the presence of the main Opposition parties.
‘We will present a fresh budget after the election,’ vowed Mahinda Samarasinghe, an UNP lawmaker.
As part of its 2006 budget, Sri Lanka will restrict a costly fuel subsidy to a few groups and boost infrastructure development, AP quoted Finance Minister Sarath Amunugama as telling parliament.
The government will spend US$350 million (euro298 million) on building new roads across the island with donor funds, he said.
Amunugama said the government expects inflation to be under 8 percent in 2006, but didn’t elaborate. Higher global oil prices have put upward pressure on inflation which is expected to hit 10 percent this year, an increase of 2.4 percentage points from 2004.
