First complete post war budget

Sandasen Marasinghe and Rasika Somaratne

Cheers and applause greeted President Mahinda Rajapaksa when he arrived in the Parliamentary Chamber at 1.42 pm yesterday to present the first complete budget he presented after the liberating the country from three decades of terrorism.

Presenting the relief and development oriented budget for the financial year 2011, President Rajapaksa in his capacity as the Financial Minister continued his Budget speech until 3.57 p.m.

The President at the commencement of his speech noted that his elder brother Chamal Rajapaksa presiding over the proceedings as the Speaker reminded him of the image of his late father D. A. Rajapaksa who occupied the Speaker’s seat once as the Deputy Speaker.

“I recall him crossing over to the opposition with late S W R D Bandaranaike and several others to give leadership to transform Sri Lanka to be a truly independent and prosperous country in Asia” President Mahinda Rajapaksa said. “It was a transformation based on our national heritage, culture, value system and our own identity. That mission was not accomplished”.

While delivering the budget speech, the President assured that he remains firmly committed to give an uncompromising leadership to fulfill the people’s aspirations for a decent living, a clean environment and a better life for their children. He added that it was with that commitment he presented the budget yesterday.

He said he was humbly proud as the Finance and Planning Minister for being able to reduce poverty to 7.6 percent during the last five years while taking the country forward as an emerging economy in Asia.

At the tail end of his speech, the President said the country’s medium term targets are low rate of inflation of around 5-6 percent, economic growth rate of around 7-8 percent and a society free from poverty. He also added that the government led by him under no circumstance will privatize or abolish free education or health services. They will not only be protected but strengthened with greater resources from the National Budget.

The President concluding his speech said “our sole responsibility is to manage the present to build a better future. That should be a future with opportunities. Let us leave our differences aside and place the country first. Let us place the future of our children first.”

He said “My policy strategy, commitment and leadership aim at building a prosperous future for our children. Their future lies in a knowledge economy. Let us join hands to make our country the Emerging Wonder of Asia.”

When he ended the speech members of the government applauded. A few opposition members were also seen joining in the applause.

The leader of the House and Irrigation and Water Resources Management Minister Nimal Siripala de Silva moved that Parliament should be adjourned until 9.30 am today.

The debate on the second reading will last until November 27 while the third reading is scheduled to be held from November 29 to December 20.

Almost all the members of Parliament were present. Some of the seats of the opposition were seen vacant. Opposition Leader Ranil Wickramasinghe was also present.

Sri Lanka Muslim Congress Leader Rauf Hakeem and SLMC members Baseer Segudaud, Hassan Ali, Noordeen Masoor, Faizer Kasim, M. Haris, M Aslam and M S Thowfeek were seen sitting with the government. Rauf Hakeem was sitting in the front row on the right hand side of Construction, Engineering Services, Housing and Common Amenities Minister Wimal Weerawansa.

The Public Gallery was full while Ambassadors, Provincial Governors, Provincial Chief Ministers and the Attorney General Mohan Pieris were among the Speaker’s guests.

After Parliament was adjourned President Mahinda Rajapaksa invited the government members and the opposition members for the traditional budget tea party.

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[Annex II]

Revision of Salaries and Allowances to Public Servants – 2011 Budget

1. All Public Servants will be paid a special allowance equivalent to 5 per cent of the basic salary, with effect from January 2011.

2. The current Cost-of-Living allowance of Rs. 5,250 per month will be increased to Rs. 5850 per month. This increase will be paid to those in the non staff grade with effect from January 2011 and to those in the staff grade with effect from July 2011.

3. Salaries of Principals and teachers will be paid as per the Public Administration Circular No. 6/2006 (VIII), with effect from January 2011.

4. Salary arrears due and payable to teachers to rectify anomalies will also be paid.

5. The ‘Academic Allowance’ paid to university academic staff, the ‘Personal Allowance’ paid to the members of the Judiciary coming under the purview of the Judicial Services Commission, and the ‘On-Call Allowance’ paid to Doctors will be increased by 25 percent, with effect from January 2011.

6. A monthly research allowance equivalent to 25 percent of the basic salary will be paid to university academic staff and staff grade officers of research institutions, who undertake research and publish related findings in an internationally accredited publication. This allowance will be availed for 2 years commencing January 2011, during which period such research has to be completed and the findings published.

7. In order to remove administrative impediments associated with the implementation of the Public Administration Circular No. 6/2006 (IV), a step-by-step salary conversion will be introduced with effect from July 2011.

Revision of the Pension and Allowances to Pensioners – 2011 Budget

1. The current Cost-of-Living allowance of Rs. 2,375 per month paid to Pensioners will be increased to Rs 2,675 per month, with effect from January 2011.

2. Those Pensioners who retired prior to 01.01.2004 will be given an increase of Rs. 750 per month while those Pensioners who have retired during the period 01.01.2004 to 31.12.2005 will be given an increase of Rs. 250/ - per month, with effect from July 2011.

This will also correct an existing anomaly in the pensions.

						Rs.Bn
				2010		2011
				Revised		Budget

Total Revenue and Grants	828.3		986.1
Total Revenue			812.1		963.5
Tax Revenue			720.0		862.1
Income Tax			135.0		154.9
Taxes on Goods and Services	429.5		495.5
Taxes on External Trade		155.5		211.8
Non Tax Revenue			92.0		101.4
Grants	16.2			22.6
Total Expenditure		1,275.0		1,419.9
Recurrent			926.0		1,017.0
Salaries and Wages		295.3		344.0
Interest			350.3		353.9
Subsidies and Transfers		197.2		207.3
Other Goods and Services	83.2		111.7
Public Investment		359.0		413.7
Education and Health		29.4		54.0
Other Infrastructure Development329.6		359.7
Other				(10.0)		(10.8)
Revenue surplus(+)/ Deficit(-)	(113.9)		(53.4)
Budget Deficit			(446.7)		(433.7)
Total Financing			446.7		433.7
Total Foreign Finance		205.5		94.5
Net Foreign Borrowings		93.5		94.5
Gross Concessional Foreign	172.5		189.5
Borrowings
Debt Repayments			79.0		115.0
Foreign Commercial		112.0		20.0
Total Domestic Financing	241.2		339.2
Non-Bank Borrowings		166.2		257.7
Foreign Owned T Bills and Bonds	40.0		39.6
Bank Borrowings			35.0		42.0
Revenue and Grants/GDP (%)	14.9		15.6
Revenue/ GDP%			14.6		15.2
Tax/GDP(%)			13.0		13.6
Expenditure/GDP(%)		23.0		22.4	
Current Expenditure/ GDP (%)	16.7		16.1
Public Investment/GDP/(%)	6.5		6.5
Revenue surplus 
(+)/ Deficit (-)/GDP%		(2.1)		(0.8)
Budget Deficit/GDP (%) (Excluding
Grants)				(8.0)		(6.8)