Bold budget for 2008 - Jayasundera

Sri Lanka due to its repetitive over seven percent growth during the past three years is a ‘growing middle income country’ and owing to this new found status, the budget cannot make a substantial adjustment in recurrent expenditure, according to the CEO of the state treasury.

“We are no longer a poor country because we recorded a US $ 1,500 per capita income last year. We are witnessing a sustained per capita income and GDP growth. As such according to the World Bank we are a growing middle income country,” Dr P. B. Jayasundera, Treasury Secretary told a large gathering of professionals and interested parties at a post budget seminar organised by the Inland Revenue Department (IRD).

He said the government is targeting increased revenue by 2010 and it will not cut down on recurrent expenditure. This, he says, is a very bold decision.

“What is underlined in this expenditure is free education, health, irrigation, water supply, roads and poverty alleviation and protection. These are the underlying policy strategies and the country has attained the highest level of human resources due to this. When cutting down on ‘expenditure’ people must be clear and not to be saying that the government should be cutting down on the above,” he stressed.

Jayasundera said that infrastructure has become the critical component in the government agenda and this period will keep the investment high. “This is a period of investment. Deficits are not good beyond a point. For the last three years the government has committed to a solid deficit reduction. Next year the deficit is targeted at seven percent with the funding that is available to the country,” he noted. He pointed out that Sri Lanka does not have to behave like a poor country anymore. “We need to go to the donor agencies and tell our plan. They believe in our story. That is why our international bond issue was three times oversubscribed,” he noted.

He said that the thrust of the budget was to look at government revenue. “This was the lowest but the last three years has seen the government revenue rising by Rs.100 million each year. This is one percent of GDP in government revenue. I call this a u turn because each year it is rising and this year we will have a 17 percent and next year 18 percent is forecasted,” he said.

He said the 2008 budget is based on a growth story. “This story is based on facilitating infrastructure which includes electricity being the main priority, the Colombo South Port and the Hambantota Port, the development of the highway network, developing the irrigation and making the water accessible,” he said.