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| Thursday, 20 November 2003 |
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Economy on upward march There had been a broad-based and commendable economic recovery in 2003. The economy is on the upward march. Our sustained effort has enabled us to achieve a growth rate of 5.6 per cent in the first six months of this year and earn for Sri Lanka the confidence of nations, Minister K.N. Choksy told Parliament yesterday. The Budget 2004 presented in Parliament yesterday by Finance Minister Choksy brought down VAT to a single band of 15 per cent, reduced the import duty surcharge to 10 per cent and increased salaries of public servants and pensions. The Budget also proposed to increase the tax free allowance for individuals to Rs.300,000 and to levy an annual fee of Rs.300 from each mobile phone subscriber. Excise duty on beer will also be increased. The Government will also provide Rs.1,000 million as initial funding for an unemployment benefit insurance scheme. The fertiliser subsidy too will be raised. Minister Choksy pointed out that employment generation, increased wages and tax relief for the lower and middle-income levels will be the immediate benefits of Budget 2004, with a determined thrust by the government to bring about a further reduction in the prices of consumer goods. Presenting the Budget in Parliament, Minister Choksy said the main theme of this year's budget proposals will be the promotion of the people's interests. He said the government strove hard to resurrect the economy by adopting a three-pronged approach of promoting peace, macro-economic stability and growth and employment creation. "It is important that we build on the results we have delivered. The challenge before us to deliver the peace and prosperity that all the people of this country desire," the Minister remarked. Outlining the Government's three-year programme, the Minister said Rs.400,000 million will be spent over the period on a variety of projects. Rs.110,000 million has been provided for capital expenditure in the budget for 2004. This is the largest amount allocated for any one year over the last decade. These funds will cover roads, power and energy, housing and water supply, education and health, agriculture, irrigation and fisheries, rehabilitation and resettlement and funding to supplement foreign aided projects. He pointed out that the budget deficit was reduced to 8.9 per cent during 2002. "For this year, we have curtailed the budget deficit at 7.8 per cent of GDP. We have been successful in reducing the public debt from 103 per cent of GDP in 2001 to 100 per cent this year." The Minister said that inflation has declined to 7.2 per cent by October 2003. The declining trend in inflation will have far reaching beneficial effects across the economy. Export earnings made a strong recovery due to the strong performance of industrial exports. Foreign direct investment has increased to almost 230 million this year. A notable development was the appreciation of the Lankan rupee in the international currency market. The total external assets of the country has increased to approximately US$ 2.9 billion to date and is expected to be US$ 3 billion by year end. Market stability and the curtailment of inflationary tendencies enabled the Central bank to reduce its policy interest four times during he first 10 months of 2003. Receipts from privatisation yielded Rs.10 billion from November 2002 to August 2003. Wasteful recurrent expenditure in Ministries and Government Departments is being constant pruned. The saving achieved by this measure is channelled to capital expenditure, the Minister said. The average annual income per person has increased to approximately Rs.93,000. Amendments to the Banking Act, a new Asset Management Law and a Foreign Exchange Management Law are ready for enactment. An economic management Law is being drafted to strengthen financial discipline in the public sector, he added.Among the other key highlights of the Budget are a Voluntary Retirement Scheme, agricultural loan relief for farmers, extended visas for foreign nationals, development of the milk industry, development of rural telecommunications and an agri-business development fund. |
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