Business Times

2011 budget preparation underway, 6.6% deficit seen

By Bandula Sirimanna

With the budget deficit projected at 6.6 % of GDP in 2011 from projected 9.9% in 2010, preliminary work on the preparation of the 2011 annual budget estimates is now underway. Letters have already been sent by Treasury Secretary Dr. P.B. Jayasundara to all Secretaries to the Ministries, Chief Secretaries of the Provincial Councils, Heads of Departments, Chairmen of Statutory Boards and Institutions, requsting them to submit their estimates and proposals for 2011.

They have been also issued with necessary guidelines, Finance Ministry sources said. Pre-budget meetings with these officials will begin within two weeks. Placing emphasis on the government’s aim to make Sri Lanka one of the strongest economies in Asia , the process of formulating the 2011 budget within a three year frame work from 2011 -2013 is already underway.

In a newspaper advertisement this week, the public, professionals, academia, artists and the media were invited to to submit their proposals and suggestions before September 30 and also indicate any failures in projects and ways of correcting these, aimed at ensuring the 2011 budget will facilitate speedy development in the country, the sources said. Budget 2011, the sources said will set the tone of development for the next three years and will be based on a Medium Term Fiscal Framework to facilitate a smooth transition to a renewed phase of socio-economic progress in line with the ‘Mahinda Chinthana’ forward vision, a senior official of the Finance Ministry said.

Tax revenue is expected to increase from 13.4% to 15.3% of GDP while non tax revenue is seen coming down from 21.9% to 21.7% of GDP in 2011. Strong growth in remittances and income from exports of services will neutralize the deficits in the trade account and hence contribute to a lower current account deficit, he added.

The budget will focus on two major areas; speedy implementation of ongoing development programmes and improving living conditions and restoration of economic activities through accelerated resettlement, rehabilitation and reconstruction programmes in the North and East.

Part of the development expenditure will be financed through external funding while a large amount of resources will have to be found domestically, he added. Finance Ministry sources emphasized the need to contain the recurrent expenditures for 2011 at those of 2010 levels ensuring that the commercial public enterprises improve their performance over their achievements in 2010. All the spending agencies have been requested to prepare estimates for 2011 together with expenditure projections for the years 2012 and 2013 in line with the Medium Term Expenditure Framework.

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