Budget reflects local thinking on reforms and inputs - Treasury Secretary

Hiran H. Senewiratne

BUDGET: The 2007 budget was prepared in consultation with all interested stakeholders in the country without relying on international donor agencies, which reflects the true local strength, Secretary Ministry of Finance and Planning Dr. P.B. Jayasundera said.

"This reflects the recognition of Sri Lanka's strength in preparing the budget by our own thinking on reforms and inputs with a long-term development emphasis, "Dr. Jayasundera told at a post budget seminar organised by the Society for International Development. The theme of the seminar was " Budget 2007: A path ahead".

Dr. Jayasundera making the keynote address said the budget has also given more emphasis on the ambitious development programme to achieve an eight per cent growth by considering growth in lagging regions outside the Western Province.

'When preparing the budget we received 750 individual proposals and many proposals from business chambers, trade unions, political parties with a consultative process to make a true local budget with medium-term emphasis," he said.

'This budget was prepared by taking a lot of strategic thinking and development strategic inputs to make Sri Lanka the commercial hub in the region. This also a comprehensive policy initiative considering all-important sectors including agriculture, apparel, industrial sectors,' he said.

'It also paves the way to taking Sri Lanka's growth of more than 10 per cent with a wide range of areas by broadening the sectors in the country, he said. Further, it also taken the 2006 as a based year targeting growth of six to seven per cent growth, he said.

'This also reflects true essence of Mahinda Chinthanaya by giving more attention for infrastructure development to develop the country in a proper manner despite all challenges and impediment, he said.

Commenting the economic performance of the 2006 Dr. Jayasundera said that despite all odds and challenges the country was able to register an eight per cent growth. Many sectors performed well and unemployment rate went down, exports increased, the plantation sector improved and the stock market established records.

With the signing of the free trade agreements with India and Pakistan 40 per cent of imports are under the duty free list and that does not mean neglecting the local industries.

He said that many duty free concessions are being considered for importation of machinery for local industries as well.

Since the large sectors are given tax relief the over dependence on tax revenue has come down from 55 per cent to 35 per cent.

The Deputy Governor, Central Bank of Sri Lanka Dr. Rani Jayamaha said the 2007 budget has focused on the fiscal and sustainable growth, which needs well focused coordination and close monitoring programmes.

Through proper fiscal policies impact the growth to a positive level including the reduction of inflationary pressures in the country, taxation of small companies should be streamlined while holding companies will bring the taxation to a better footing by encouraging congloramate subsidiaries to create proper tax regimes in the country, she said.

Dr. Jayamaha said that infrastructure development including ports, airport also given emphasis on the global linkages like business process re-engineering, economic outsourcing, call centres are important for the global links.

President of the National Chamber of Commerce Nirmali Samaratunga said that joint consultative approach with chambers and private sector presented key areas on the macro economic level.

She said the 2007 budget is a development-oriented budget with an emphasis on the medium-term 10 years development focus.

The business sector also observes that no type of taxation on several change moderate tax rate are taxation based, with adverse impacts on some businesses and benefits for others, she said.

VAT and Economic Service Charge make some complexes with the reduction of expected revenue for the Government.

The increase of Cess for some sectors will help to develop those sectors to improve the development of the specific sectors in the country, Samaratunga said.