Sri Lankan govt proposes hike in public spending in new budget ahead of election

Sri Lanka's government on Tuesday proposed increases in spending on public servants and incentives to boost agriculture and fisheries in a new national budget, which opposition lawmakers criticized as an attempt to attract voters ahead of a presidential election this year. Finance Minister Mangala Samaraweera said the basic salaries of public sector employees will increase by 107 per cent from 2016 to 2020, and the government has allocated 40 billion rupees (USD 222 million) in the budget to pay the increased amount.

They will also receive an allowance of 2,500 rupees (USD 14) starting July 1. The 3.15 trillion rupee (USD 17.5 billion) budget covers only eight months because of a political crisis that erupted last October, forcing the adoption of a four-month stopgap funding measure to avert a government shutdown. Presenting the budget in Parliament, Samaraweera also announced a decision to increase allowances for the military and police, concessionary loans targeting young people to build an entrepreneurial society, and incentives, loans and state assistance for agriculture and fisheries. Funds were also allocated for poverty alleviation and to build reservoirs and canals.

To help pay for the increased expenditures, Samaraweera announced higher taxes on cigarettes, liquor and vehicles and increased casino fees. Opposition lawmaker Chandima Weerakkody said the budget is designed to win votes in the election. "They have presented this budget targeting the presidential election which is to be held within the next few months. They are trying to deceive the public for their political gains.

The government will not be able to implement these proposals because they don't have money," he said. Parliamentary elections are to be held next year. The budget proposals come as Sri Lanka struggles to repay $5.9 billion in foreign loans this year, of which 40 percent needs to be serviced during the first three months. The country used its reserves to repay a $1 billion sovereign bond loan in January. 

(With inputs from agencies.)