Economy

President Rajapaksa presents his 10th budget (Photo: Asiantribune.com)

Rajapaksa boosts handouts lavishly in his election-eyed "country bumpkin budget"

Sun, 26 October 2014 10:24

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(NIDAHASA News) President Mahinda Rajapaksa who is controversially set to run for a third term, presented his 2015 budget to the parliament on Friday (24), with a range of handouts, that covered almost all sectors of the economy.

In his budget, which Rajapaksa himself sarcastically called a "country bumpkin's budget", he gave large benefits for people of rural areas, which form Rajapaksa's main vote base.

However opposition dismissed unprecedented budget giveaways as election-targeted reliefs.

President Rajapaksa, who is also finance minister, increased the salary of state employees and cut VAT by 1 percent while reducing water bills by 25 percent. He also promised farmers free seeds for growing rice next season and a 17.6 percent increase in guaranteed price for their rice.

Sri Lanka’s budget deficit will be reduced to 4.6% of Gross Domestic Product (GDP) in 2015 from this year’s estimated 5.0%. Official Budget documents showed the Government has revised public investment down to 5.6% of GDP this year from an original 6.7% to cut down the deficit to 5.0%. By 2017, the budget deficit can be down to 3.0% of GDP, Reuters reported.

Central Bank Governor Ajith Nivard Cabraal defended the relief-oriented Budget, insisting it was not targeting elections but rather “very much part of the plan”.
“This Budget merely continues what was begun several years ago. People think reduction in electricity charges, for example, is an election gimmick, but it was clearly set out in the ‘Mahinda Chinthana’ in 2009,” he told a post-Budget gathering organized by KPMG last evening.

However main opposition United National Party (UNP) parliamentarian Eran Wickramaratne was quick to dismiss the Budget as little more than an election goodies list.

“It’s an inward-looking, protectionist and giveaway Budget. It’s full of promises of pensions, subsidies and concessions. Clearly aimed at an election. The giveaways included vehicle duty reductions for Sri Lankans working overseas, the elderly, unemployed and others. The budgetary framework is largely unchanged. The private sector and exports will continue to be subservient to other socio-political objectives,” he said.

The ex-bank head also pointed out the Budget failed to deal with larger issues of governance and improved financial accountability.

Rajapaksa is likely to call an early presidential election amid his fading popularity. However some opposition groups are ready to legally challenge his third term, citing a technical error in constitutional amendment Rajapaksa put forward to remove two-term limit for presidency.

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