Sri Lanka plans to spend more and borrow further next year as expenses for defence and fuel related subsidies escalate, reports said this week.
Sri Lanka’s has substantially increased its military budget for next year to almost US$700 million, the Sunday Times said this week. The rise of over 20% comes amid a stepping up of violence in the island’s east between Army-backed paramilitaries and the Liberation Tigers.
In a report titled “Defence takes lion’s share of 2006 budget,” the Sunday Times said the proposed budget raises expenditure on the military next year to Rs. 69,470 million (US$690 million), a rise of nearly Rs. 13,000 from this year’s Rs. 56,300 million (US$ 554 million).
The figures tabled in parliament show that the biggest chunk of capital spending will be by the air force which gets four billion rupees (about US$40 million), up from 3.3 billion rupees this year, AFP reported.
The army’s total spending goes up to 41.9 billion rupees, up from 32 billion rupees this year.
Defence is among several areas that have been allocated increased funding in the government estimates for the coming year, the paper said.
Sri Lanka is already digging deep for extra cash after surging crude prices will see its oil import bill exceed US$ 800 million to US$ 1.5 billion this year, LBO reported.
Overall borrowing programme will expand by Rs. 100 billion to Rs. 536 billion, as the government leans further on foreign debt, rupee loans and government bonds. The programme excludes Rs. 300 billion ceiling set for borrowings through treasury bills.
Nevertheless, Sri Lanka hopes to contain its budget deficit to eight percent, Treasury Secretary P B Jayasundara said adding that the government plans to raise US$ 100 million through an international bond issue this month, aimed at its migrant workers.
With tsunami related costs also piling up, Jayasundara says Sri Lanka has asked the Group of Eight industrial countries to extend its one-year debt moratorium for another twelve months.
G8 members waived off US$ 250 million due in interest payments this year.
The total government expenditure for 2006 was estimated at Rs. 568 billion, up from 438 billion in 2005, in the Appropriation Bill for next year to be presented by Finance Minister Dr. Sarath Amunugama in Parliament on Tuesday, the paper said.
Some analysts argue Sri Lanka has developed a domestic ‘war economy’ where the defence budget is one of the largest injections of state funds into the market.
“Army recruitment and compensation have become the primary source of resources transferred into the economy of the rural poor in the Sinhalese-majority regions of the South,” says Prof. Kenneth Bush in his book “Learning to read between the lines: the intra-group dimensions of ethnic conflict in Sri Lanka.”
The rural economy of the rural poor in the South is “three times more dependent on ‘military remittances’ than official poverty alleviation programmes (Janasaviya and Samuradhi); and more dependent on Army recruitment and compensation than on overseas remittances,” he says.
“In effect, successive governments [have] been using military employment as a grand youth employment cum poverty alleviation programme,” Prof. Bush argues.
Sri Lanka’s has substantially increased its military budget for next year to almost US$700 million, the Sunday Times said this week. The rise of over 20% comes amid a stepping up of violence in the island’s east between Army-backed paramilitaries and the Liberation Tigers.
In a report titled “Defence takes lion’s share of 2006 budget,” the Sunday Times said the proposed budget raises expenditure on the military next year to Rs. 69,470 million (US$690 million), a rise of nearly Rs. 13,000 from this year’s Rs. 56,300 million (US$ 554 million).
The figures tabled in parliament show that the biggest chunk of capital spending will be by the air force which gets four billion rupees (about US$40 million), up from 3.3 billion rupees this year, AFP reported.
The army’s total spending goes up to 41.9 billion rupees, up from 32 billion rupees this year.
Defence is among several areas that have been allocated increased funding in the government estimates for the coming year, the paper said.
Sri Lanka is already digging deep for extra cash after surging crude prices will see its oil import bill exceed US$ 800 million to US$ 1.5 billion this year, LBO reported.
Overall borrowing programme will expand by Rs. 100 billion to Rs. 536 billion, as the government leans further on foreign debt, rupee loans and government bonds. The programme excludes Rs. 300 billion ceiling set for borrowings through treasury bills.
Nevertheless, Sri Lanka hopes to contain its budget deficit to eight percent, Treasury Secretary P B Jayasundara said adding that the government plans to raise US$ 100 million through an international bond issue this month, aimed at its migrant workers.
With tsunami related costs also piling up, Jayasundara says Sri Lanka has asked the Group of Eight industrial countries to extend its one-year debt moratorium for another twelve months.
G8 members waived off US$ 250 million due in interest payments this year.
The total government expenditure for 2006 was estimated at Rs. 568 billion, up from 438 billion in 2005, in the Appropriation Bill for next year to be presented by Finance Minister Dr. Sarath Amunugama in Parliament on Tuesday, the paper said.
Some analysts argue Sri Lanka has developed a domestic ‘war economy’ where the defence budget is one of the largest injections of state funds into the market.
“Army recruitment and compensation have become the primary source of resources transferred into the economy of the rural poor in the Sinhalese-majority regions of the South,” says Prof. Kenneth Bush in his book “Learning to read between the lines: the intra-group dimensions of ethnic conflict in Sri Lanka.”
The rural economy of the rural poor in the South is “three times more dependent on ‘military remittances’ than official poverty alleviation programmes (Janasaviya and Samuradhi); and more dependent on Army recruitment and compensation than on overseas remittances,” he says.
“In effect, successive governments [have] been using military employment as a grand youth employment cum poverty alleviation programme,” Prof. Bush argues.
