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The Business Chamber is pleased to observe a core emphasis in the Budget on private sector stakeholders and the Government to work in co-operation in the management of the economy. Apparently this is done with the objective of creating long-term stability to enable the economy to recover so that the peace dividend could be maximised.

The Government is also looking inwards so as to lower public costs, bring about internal adjustments such as the transfer of short term debts from the banking sector into longer term bonds, and eliminate costs caused by wasteful expenditure identified in the public sector.

In the face of high Government operational costs, it is our understanding that a substantial reduction in tax and duty will not be possible.

However, the reforms envisaged in the tax administration and broad basing the collection of VAT is a positive form of generating additional revenues from sources hitherto untapped.

The Government in its wisdom is also making an endeavour at social development by reducing the cost of housing finance and making housing loans affordable for the low income earners.

In developing the infrastructure a proposal of vital importance is the establishment of a Road Fund.

The ban on import of vehicles and machinery over ten years old too is a wise step in eliminating use of valuable foreign exchange.

We consider the 6,000 million rupee credit line from India to purchase machinery and equipment on highly concessional terms for private sector rehabilitation and employment generation, a well thought out proposal.

Yet another significant measure contained in the Budget Proposals relates to the tea sector which will now be governed through a joint partnership with private sector stakeholders regulating and developing markets and also establishing standards for Ceylon Tea.

It is our view that the further liberalisation of exchange control will lead to foreign investors purchasing Treasury Bills. This will have an impact on domestic interest rates thereby causing a substantial drop to be on par with international levels.

Furthermore, the extension of time period for booking forward exchange contracts will result in foreign exchange rates remaining stable for a considerable period.

In the overall context these are laudable proposals to attract foreign capital.

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