Sri Lanka government boosts budget ahead of elections

Sri Lanka's finance minister Mangala Samaraweera, center, shows his folder carrying government's budget proposal for the year 2019 to opposition as he enters the Parliament in Colombo, Sri Lanka, Tuesday, March 5, 2019. (AP Photo/Eranga Jayawardena)

COLOMBO, Sri Lanka — 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 percent from 2016 to 2020, and the government has allocated 40 billion rupees ($222 million) in the budget to pay the increased amount. They will also receive an allowance of 2,500 rupees ($14) starting July 1.

The 3.15 trillion rupee ($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. 

Sri Lanka's annual budget is usually presented in November, but was delayed by the political crisis.

The upheaval occurred after President Maithripala Sirisena abruptly fired Prime Minister Ranil Wickremesinghe and replaced him with former strongman President Mahinda Rajapaksa. Sirisena later dissolved Parliament and called for new elections.

However, Rajapaksa could not achieve a majority in Parliament and Wickremesinghe maintained his sacking was illegal, saying he still controlled a majority in the 225-member house. A subsequent Supreme Court ruling declared that Sirisena's dissolution of Parliament was illegal. Sirisena was forced to reappoint Wickremesinghe as prime minister.

In December, Samaraweera presented a stopgap measure of 1.77 trillion rupees ($9.39 billion) to cover government expenditures over the first four months of 2019, which Parliament approved, averting a possible government shutdown on Jan. 1.

Last week, the IMF said it has agreed to extend a $1.5 billion loan program for Sri Lanka for an additional year. It had been due to release an instalment in October when the political crisis hit and the program was temporary suspended.

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