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Sri Lankan new gov't presents populist budget

Xinhua, January 30, 2015 Adjust font size:

Sri Lanka's new government presented a populist budget here on Thursday, slashing prices of food items but also seeking to increase revenue, an official said.

Sri Lanka's new government, which was appointed earlier this month, presented an interim-budget that will be in effect till June.

This is in line with the new coalition government's 100-day plan that seeks to implement constitutional changes that include trimming executive powers and establish an independent commission ahead of a parliament election likely in late April.

The new government headed by Prime Minister Ranil Wickremesinghe reduced budget deficit to 4.4 percent from 4.6 percent outlined in the last budget of the previous government headed by President Mahinda Rajapaksa.

Public investment was also reduced from 6.2 percent to 4.6 percent amid attempts to reduce the country's debt burden.

The latest round of calculations put debt at 88.9 percent of gross domestic product (GDP) rather than the 74.4 percent tagged previously.

The budget also slashed prices of 13 essential items including cement, gas and milk powder to provide "relief" to consumers. A 15 percent decrease in taxes for small vehicles and cement was also featured along with salary and pension hikes for about 1.3 million public workers.

However, steep increases in "one off" tax payments were also slapped on several industries including telecommunications and broadcast companies.

"All these incidents indicate the need for strong and innovative measures in the future to avoid the repetition of such things and reduce the budget deficit and outstanding debt of the country," Finance Minister Ravi Karunanayake told parliament.

Loss making state owned enterprises were also focused on with the biggest change applied to national carrier Srilankan Airlines and budget carrier Mihin, which had begun under the previous administration.

The two airlines that have accumulated 884 million U.S. dollars within the last five years will be merged to reduce drain on state coffers. Endi