11/23/2011, 00.00
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Rajapaksa presents ‘army-friendly’ 2012 budget

by Melani Manel Perera
Defence spending still takes the lion share (LKR 230 billion or US$ 2.1 billion). The president expects growth to reach 8 per cent next year, with per capita incomes of US$ 4,000 by 2016. Economic opening to outside forces follows years of a self-centred path. Opposition parties, public sector workers and Catholics are critical. The 2012 budget does not focus on people-oriented development.
Colombo (AsiaNews) – Sri Lankan President Mahinda Rajapaksa presented next year’s budget, the 7th of his mandate. Growth is expected to be around 8 per cent, whilst per capita income should reach US$ 4,000 by 2016. The plan is to focus on external markets after years of a closed economy. Defence spending will continue to increase to meet military needs. “Sri Lanka is travelling on a new road,” Rajapaksa said, “turning its back on a very destructive path that began in 1977.” The opposition remains sceptical about spending priorities. Public sector workers and Catholics are equally unconvinced; for them the budget serves the interests of the government, not the needs of the people for development.

Despite the end of the country’s ethnic conflict in 2009, defence spending will hit LKR 230 billion (US$ 2.1 billion) next year, up from 215 billion this year. For the military, the defence budget must remain high to repay loans on military hardware purchased to fight the Tamil Tigers.

As part of new revenue-raising measures, Rajapaksa hiked taxes on luxury vehicles. At the same time, he announced a 10 per cent salary increase for public servants.

Opposition parties are critical of the new budget. For Tissa Aththanayake, general secretary of the United National Party (UNP), the president’s proposed budget for 2012 is a “short story” designed to please in the International Monetary Fund.

According to Lal Kantha, a former MP for the Janatha Vimukthi Peramuna (JVP) party, and current president of the National Trade Union Centre, “the budget will not increase income levels” for ordinary Sri Lankans, but “will extract wealth from the people to finance government waste and its mounting debt.”

In fact, health care spending has been cut, whilst the education sector is getting less than 6 per cent of the budget.

For Vijitha Herath, propaganda secretary and Democratic National Alliance lawmaker, “The government has failed to meet people’s expectations. Public servants wanted a salary increase of LKR 10,000 (US$ 100), but got only 10 per cent.”

“In the meantime, the prices for fuel and basic items have gone up, whilst promises made in the previous budget went unheeded. For example, the government was supposed to hire 15,000 unemployed graduates but nothing came of it.”

“The cost of living has skyrocketed,” said UNP MP Ravi Karunanayake. “Wages however have not kept pace. People’s purchasing power has declined. The government has forgotten ordinary people.”

Fr Reid Shelton Fernando is also scratching his head. “The government expects a higher rate of growth. If this were true, we would expect a positive impact on the people. This has not happened in the past, and ‘development’ has not helped people much either. The ranks of the poor have instead increased. The negative side of the budget will become evident in the coming months. Let us pray, and hope that it won’t happen."
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