Budget 2012 tomorrow :
Govt aims at containing budget deficit at 6.2 percent of GDP
The 2012 Budget will ensure stable economic growth while maintaining
low inflation, Finance Ministry sources said. He said the government had
succeeded in maintaining economic growth of eight percent this year and
reducing inflation from 11 percent to 5.7 percent and was a major
Around 60 pre-budget meetings were held with representatives from
various sectors seeking input to draft the final budget.” The objective
of the meetings is to formulate a realistic budget to divert resources
for priority areas identified in the Mahinda Chinthana and phased out in
the Medium Term Expenditure Frame Work 2012 - 2014”, sources said.
Priority will be given to ongoing development programs before
allocating resources for new projects.
The government aims at containing the budget deficit at 6.2 percent
of the GDP to ensure economic development, is maintained at 8 percent
and the rate of annual inflation at 6 to 7 percent.
The total estimated expenditure for 2012 is Rs. 2,220 billion,
increasing Recurrent Expenditure from Rs. 1,029 billion in 2011 to Rs.
1,109 billion in 2012, and the Capital Expenditure from Rs. 938 billion
to Rs. 1,111 billion. Revenue for 2012 will be Rs. 1,115 billion.
Public Investment has increased from Rs. 453 billion in 2011 to Rs.
541 billion in 2012 to maintain the momentum in the growth rate of 8
Central Bank Governor, Ajith Nivard Cabraal said that the 2012 Budget
will be development-oriented and will help spur the growth momentum.
He said the next budget will promote inclusivity to ensure all
sectors benefit from development.
“The business community will benefit from the growth momentum and the
sound macro-economic fundamentals”, he said.
The Central Bank said the economic outlook in Sri Lanka remains
positive with the economy continuing along with a year-on-year change in
the Colombo Consumer Price Index (CCPI) (2006/07= 100) declining
substantially from 6.4 percent in September to 5.1 percent in October
“The annual average inflation dropped from 7.2 percent in September
to 7.1 percent in October. Further core inflation on a year-on-year
basis declined from 6.9 percent in September to 5.5 percent in October”,
the bank said.
“Fuel price adjustments in October and corresponding adjustments of
costs relating to public and goods transportation could cause a marginal
upward movement in prices”,a Central Bank release stated.
Cabraal said that poverty reduction will continue and added that the
focus on inclusivity will help all segments of society to benefit from
Financial experts said that large-scale investments are needed to
spur economic growth and added that the takeover of private entities and
assets will discourage investors who are keen to set up ventures in Sri
LIRNEasia Lead Economist and MP, Dr. Harsha De Silva said that
interest on borrowings is around Rs. 314 billion which is ten times the
education budget for next year.
He said that decline in investments will lead to more borrowings
which will increase the interest component for the country.
The Ceylon Chamber of Commerce (CCC) has called upon the government
to simplify the tax system and broaden the tax base to enhance revenue
The Chamber has further called upon officials to promote exports and
restructure the Temporary Importation for Export Processing scheme to
benefit the SME sector exporters.
Concessionary tax rate for value-added exports and encouraging export
market diversification, reduction in the cost of packaging to increase
value-added exports are some of the major budget proposals of the
The Sri Lanka Chamber of Small Industries President Aloy Jayawardene
said that problems of the SME sector enterprises are not properly looked
into and added that there were more incentives for SME sector
Many SME sector industries are unable to sustain businesses due to
the high cost of energy and labour which has made exports uncompetitive.
The 2012 Budget will be presented tomorrow.