Budget 2011: Increased Govt. expenditure to stimulate growth

By Bandula Sirimanna

Next year’s Budget will incur an additional expenditure of Rs 50 billion for Public sector salaries and wages, a senior official of the Finance Ministry said.

Expenditure on Public sector salaries and wages is expected to increase from the current Rs 268.2 billion to an estimated Rs 318 billion in 2011, while the Pensions bill will rise from Rs 93 billion to Rs 110 billion, he said.

The expenditure on Fertiliser subsidy will remain unchanged at Rs 30 billion in 2011, while Samurdhi and Welfare payments will be reduced from Rs 35 billion to Rs 9 billion

Meanwhile, government spending is set to rise sharply in 2011, to a projected Rs 1.9 trillion ( Rs 1,905 billion) from an estimated Rs 1.28 trillion (Rs 1,280 billion) in 2010, as Sri Lanka prepares to build infrastructure for a post-war revival, and lay the foundation for more private investment, according to 2011 Budget estimates being prepared.

Government is also taking measures to slash its Budget deficit and rationalise taxes to spur economic growth after the 30-year-old war. Treasury officials are working on plans to narrow the deficit to at least 7% in the 2011 Budget, from 8 % in 2010, the official said.

State revenue is seen rising to Rs 900 million from Rs.817.8 million in 2010, he said. The Appropriation Bill for 2011 will be presented in Parliament in the third week of October, and the Budget on November 22 by the President.

Budgetary estimates for Ministries are being finalised in consultation with the Secretaries at meetings held at the Treasury. He noted that financial allocations will be made after strict evaluations under the directions of Treasury Secretary Dr. P.B Jayasundara, on proposals made by ministries.

A proposal to bring down excessive tax rates on personal and corporate income as well as financial institutions, and do away with ad hoc and unproductive tax concessions is being considered, he said. Streamlining taxes and relying on faster growth will be the focus of the 2011 Budget, to boost revenue.

Welfare and poverty alleviation, infrastructure and rural development, large-scale public investment projects, expansion of State-owned enterprises, reconstruction in the conflict-affected region and assistance to production sectors, all reflect the potential increase in government expenditure. The expansion of the loss-making State-owned enterprises, including the public transport system and the railway is also exerting pressure on the government Budget, he said.

Public investments will increase from Rs.361 billion in 2010, to an estimated Rs 400 billion in 2011, he added.

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