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Friday, 22 July 2016 00:17 - - {{hitsCtrl.values.hits}}
Cabinet approval has been given for the Government to begin preparing the Budget for the year 2017 targeting 6% growth, a deficit of 4.7% and public investment at 6% of GDP, which are also in line with International Monetary Fund (IMF) guidelines.
“Budget 2017 expects to reinstate the discipline of public finance with the principles of ‘transparency’ and ‘accountability’. It would be possible to confront with the challenges of attracting foreign investment on news trends of global economy, and expanding foreign trade. Improvement of the economic growth by increasing public income and through useful expenses is a priority of the government,” the Cabinet paper submitted by Finance Minister Ravi Karunanayake said.
A broad strategy has been planned by the government to address short-term imbalances and midterm challenges. Accordingly, the midterm macroeconomic aim is to bring the budget deficit to 3.5 as a percentage of the GDP and the public debt rate to 68% of GDP.
The Budget 2017 is expected to be prepared under a “zero based budgeting” system creating a performance culture based on performance of public expenses. It aims to achieve the targets of creating a million jobs, to increase income, raise rural economic development, and affirmation land ownership, declared as the midterm targets of the Government.
These development goals of the Government are also linked to achieving 17 Sustainable Development Goals of the UN which should be achieved by 2030, as the Sri Lankan Government became a signatory to this in 2015.
The Finance Ministry has been given Cabinet approval to release Rs.1 billion worth “Letters of Comfort” to Bank of Ceylon and People’s Bank so that they can issue funds to plantation companies to provide workers with a Rs.2500 salary increase.
The pay hike was promised by the Government during elections last year but plantation companies have balked at implementing it citing lower exports. However under this system the Treasury will effectively provide guarantees to the two State banks who can then issue the funds to plantation companies through the Sri Lanka Tea Board.
“The Plantation Industry Ministry has proposed to implement this scheme through the Sri Lanka Tea Board. The State banks should allow a maximum of Rs.1 billion to the Tea Board to meet requirements of the plantation companies with a grace period of one year and a repayment period of three years,” the Cabinet paper said.
The loans will be provided to regional plantation companies by the Tea Board based on requirements. However the Finance Ministry has demanded the Sri Lanka Tea Board and Plantation Industry Ministry prepare a “practical repayment mechanism,” as the regional plantation companies under the Government have been unprofitable for years.
