Defence
FINANCE MINISTER KN Choksy tabled the budget for the year 2003 in Parliament on 6 November declaring that government aim was long-term development and economic reform to support the current peace process rather than immediate relief to the population. Tamil United Liberation Front (TULF) leader V Anandasangaree severely criticized the allocation of Rs 45 billion ($465 million) for defence and said that the move will discourage peace efforts. MP Joseph Pararajasingham says that governments spent Rs 591 billion ($609 billion) on defence between 1983 and 2001. In 2000, the defence expenditure reached 7% of the GDP. The Finance minister promised widening of the scope of privatisation and further deregulation. Based on 5.5% GDP growth, the budget deficit target is set at 7.5%. Privatisation proceeds will contribute to financing the deficit. The government will sell 12% of its shares in Sri Lanka Telecom in December and is considering the sale of the Co-operative Wholesale Establishment, the largest trading organisation in Sri Lanka. In order to boost investment, the government will also seek to amend the Termination of Employment Act and the Industrial Disputes Act to make it easy for employers to sack workers. The move is expected to be bitterly opposed by the trade union movement. The current peace process has raised investor confidence. But major new investments are likely to be postponed until after the aid conference in Japan in mid 2003 and may depend on signs that negotiations between the Sri Lankan government and the LTTE are leading to a lasting solution to the conflict. Observers say the continuing tension between the government and President Chandrika Kumaratunge and the threat of dissolution of Parliament after 5 December will affect investment.
Next article
Back to Sri Lanka Monitor Index page
Back to The Sri Lanka Project Welcome page