President Mahinda Rajapakse, who is also the commander-in-chief and finance minister, sought approval for the country's largest-ever defense budget from Parliament on Thursday, November 6 as government forces continued their military offensive in the North.
Rajapaksa proposed to spend 177 billion rupees ($1.6 billion) on defense for 2009, an increase of 6.4 percent from 166.4 billion rupees ($1.5 billion) allocated this year.
In his speech, Rajapaksa said Sri Lankan soldiers had seized several LTTE bases and large swathes of land in the Tamil-dominated north and were close to crushing the organisation.
"It is to eradicate terrorism through this true humanitarian exercise that we spent a substantial amount of money on national security," he said.
The Tamil National Alliance party (TNA) - the largest Tamil political party with 22 lawmakers in the country's 225-member Parliament — walked out of the chamber during Rajapaksa's speech, protesting that Tamil civilians were being targeted in the government's military campaign.
TNA released a statement saying “As a mark of strong protest against and firm condemnation of the ruthless prosecution of the war by the Sri Lankan State in the North – Eastern territory of Sri Lanka, the areas of historical habitation of the Tamil speaking people, carried out by continuous aerial bombardment, multi barrel rocket fire, and other military attacks in Tamil civilian populated areas, through which war, the Sri Lankan State continues to commit genocide of the Tamil nation, by the extermination of Tamil civilians, and by the destruction and devastation of the Tamil homeland, and by the displacement of hundreds of thousands of Tamil civilians, tantamount to ethnic cleansing, and for the prosecution of which war, the Sri Lankan State seeks to allocate a colossal sum of money under the Budget proposals 2009, the Members of Parliament of the Illankai Tamil Arasu Kadchi ( Tamil National Alliance), will boycott the Budget speech and walk out of the House when the Hon.Minister of Finance commences the presentation of Budget proposals 2009.”
Rajapakse also announced a one percent tax on most goods and services to "rebuild communities and infrastructure facilities affected by terrorism," and downgraded the country's economic growth.
Despite high inflation, running at 23.4 percent at the end of last month, the government's war against the Tamil Tigers is seen as highly popular among the majority Sinhalese community.
Rajapakse also announced increased taxes on imported food, electrical and household goods, and raised import and export cargo duty from three percent to five percent.
Official figures showed that overall state expenses for 2009 will increase 15 percent to 15.6 billion dollars, nearly twice the expected government revenue of 7.92 billion dollars.
The government hopes to bridge the deficit with local and foreign loans.
Dayasiri Jayasekara, a lawmaker from the main opposition United Nation Party (UNP) attacked the budget and warned that resorting to external borrowing would lead to ‘dire consequences’.
“There is a bleak picture of our economy today. We have identified certain shortcomings in the Appropriation Bill for the 2009 Budget as well. The Government has been compelled to go for external borrowings at high interest rates. It will have dire consequences on the economy,” Jayasekara said.
On Tuesday November 4, the UNP presented its 'alternative budget proposals' pledging to increase the salary of public sector workers by Rs. 7500, and a minimum wage of Rs. 40,000 for soldiers.
UNP lawmaker Ravi Karunanayake commenting on the proposals said, a future UNP government would reduce the 'burden' of 110 ministers to 35 ministers.
"Savings will be utilised for security development,".
