Expediting mega projects, achieving mid term targets focus of Budget 2008 - Siyambalapitiya

by Gamini Warushamana and Lalin Fernandopulle

Expediting work on the mega development projects and achieving the mid term targets under the Mahinda Chintana 10-year program is the focus of Budget 2008, said Deputy Finance Minister Ranjith Siyambalapitiya.

He said mega development projects such as the Norochcholai, Upper kotmale, the Hambantota Port and the Southern Highway will be given priority in the forthcoming Budget.

"The escalating cost-of-living, resolving the North East crisis and bringing permanent peace to the country, bridging regional disparity with economic development in the rural sector and finding alternatives to the looming power crisis are some of the burning issues identified by the government", Siyambalapitiya said.

The Deputy Minister said the government's total expenditure for 2008 will be Rs. 1,515 billion, a 15 percent increase compared to last year's expenditure. The recurrent expenditure will be Rs. 725 billion while the capital expenditure will be Rs. 790 billion.

The increasing expenditure will be financed by increasing tax revenue. The Government can achieve the revenue target. The tax revenue increased by 30 percent last month. Over 50,000 new tax files were opened. The Tax culture is being changed by reducing indirect taxes and increasing direct taxes.

The government targets to maintain the Budget deficit at 6% while maintaining its commitment to eradicate terrorism from the North and East.

"It is not an easy task to maintain a low budget deficit while having to fight a ruthless terrorist outfit with sophisticated weapons. The government's defence expenditure this year is over Rs. 50 billion", Siyambalapitiya said.

The SME sector is considered the backbone of the economy under the Mahinda Chintana program and this budget will provide concessions to the sector. President Mahinda Rajapaksa held a discussion with the business community to seek their views to prepare the Budget.

The subsidies given to marginalised people and agriculture will not be reduced. The budget will introduce measures to curtail the rising cost-of-living.

However, the challenges are complex and difficult to control. Crude oil prices last week hit $96 per barrel.

The Government can increase the salaries of the public sector workers and reduce interest rates from state banks. Solutions for higher wheat flour and milk powder are long term. We have to increase local production", the Deputy Minister said.

This is the third Budget to be presented by President Rajapaksa and it will be development and people friendly.

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