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| Wednesday, 25 August 2004 |
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Govt to consider all subsidies for needy : current inflation, drought at manageable level - Dr. P.B. Jayasundera by Lionel Yodhasinghe Finance Ministry Secretary Dr. P.B. Jayasundera said that the current inflation due to the world oil price hike and the severe drought in several districts are short term issues and they are at a manageable level. The Government would consider all affordable subsidies to the needy and would take other action to counter them in the future, he told a press briefing on Monday. The drought would end by November. The price revision on certain goods and services would be made in keeping with the increasing world oil prices. He said that the two major crises, oil prices and drought are manageable and the Government would take bold decisions in solving this crisis. He said the UPFA Government's maiden budget is scheduled to be presented on November 10 and the Government would maintain a budget deficit of US $ 8 billion this year. There is no possibility to increase the subsidy on fuel as to maintain a sustainable budget this year, he said. Dr. Jayasundera said that unlike in the past, this Government has decided to obtain different views and proposals from people from all strata of society in preparing the budget to make it more effective in the country's economic development. A public announcement in this regard will be made soon, he said. He said that the Government has already given a subsidy on fuel and it cannot grant more on oil as thus subsidy goes to unwanted parties. The subsidy should be given but the target group who really needs the subsidy should be identified. Except Samurdhi and fertiliser, many other subsidies on oil are going to those who do not need them. Even foreign tourists are enjoying subsidies under the present system, he said. A policy dialogue is open for the public and private sector, which would help the government in deciding priority areas in the next budget. Dr. Jayasundera said that the Yala paddy harvest will decrease by 20 percent due to the current drought and social problems and diseases would follow. The drought will also affect hydropower generation. Thermal power would have to be increased to support this, which would increase the fuel consumption followed by price hikes in electricity bills by at least 5 percent. He said that eight percent in bus and train fares should be revised within the next two weeks in keeping with the increased world fuel prices. Dr. Jayasundera said that the Government has already allocated Rs. 8 billion on subsidies and it will be unable to maintain a sustainable budget if this is increased by giving more subsidies. He said the Cabinet has approved Rs. 2.5 billion for drought relief and the Treasury has already released nearly Rs. 1.8 billion to provide urgent relief to the needy. Awareness among the public and the private sector on energy conservation should be made, as the time is opportune to go for energy conservation promotion. The Government has already spent US $ 4.8 billion from the total US $ 8 billion subsidy and this would not be sufficient unless price adjustments are done to covering fuel price hike, he said. He emphasized the need to use drought relief on productive purposes such as getting the beneficiaries labour on tank renovation projects. The private sector also should take a leadership in fuel conservation as a Corporate Social Responsibility matter and introduce fuel-efficient methods through different techniques in their institutions to cut down fuel costs. Answering journalists, he said that political uncertainty is not a speculation in Sri Lanka as this situation has been prevailing for nearly two decades and people and investors know this situation. This is common in Europe, Asian countries, Middle East, India and almost everywhere in the world. Hence political uncertainty would not bar new businesses. He also said that the Government would take every possible step to encourage people to go in self-employment and other ventures to increase their income level, as it is the only measure to counter the increasing inflation level. The Quota Board will recommend buying all requirements for line Ministries from local manufacture's as one bold step towards supporting this project. Public investment would be fully absorbed during this year and this would improve the infrastructures more than the previous year and all targeted development projects such as Southern Highway would be continued, he said. |
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