Govt increases defence spending

The government allocated a record 253.9 billion rupees for the defence ministry, which is 16.5% from the total estimated spending of Rs 1,542 billion for the year 2014.

The 2014 defence budget is marginally higher than the 249 billion rupees budgeted for this year.

Meanwhile 51 billion rupees has been allocated for the Justice Ministry, Rs 144.9 billion for the Ministry of Ports and Highways, 106 billion rupees for the Ministry of Economic Development, 75.9 billion rupees for Education, Higher Education and Education Services ministries and 117.6 billion rupees for the Ministry of Health. 

The government’s estimated income for the next year is 1,100 billion rupees.   

Sri Lanka will aim for more than 7.5 percent annual economic growth in the next three years, President Mahinda Rajapaksa told the parliament on Thursday while presenting the 2014 budget. 

The central bank expects growth of 7.2 percent this year. The International Monetary Fund has forecast 6.5 percent growth this year and again in 2014.

President Mahinda Rajapaksa, who is also the finance minister, said maintaining a flexible exchange rate regime along with productivity improvement is important to achieve the export revenue target of $20 billion in 2020.

He told parliament he was raising telecom tax from 20 to 25 percent to rake in more revenue from the rapidly growing industry.

Rajapakse introduced a 15 percent tax on land leased to foreign nationals, slapped a two percent tax on banks and raised duties on the import and export of several commodities.

The government expects to reduce the budget deficit to 5.2% in 2014, to 4.5% in 2015, and to 3.8% by 2016.