(Adds more details)
COLOMBO Nov 8 Sri Lankan President Mahinda
Rajapaksa on Thursday began presenting the 2013 budget to the
island nation's parliament.
Following are some highlights of the budget:
Economic growth is forecast at 7.5 percent for 2013, against
a forecast of 6.8 percent for this year. Sri Lanka posted record
growth of 8.2 percent in 2011, but the economy has slowed as a
result of tight monetary and fiscal policies adopted to curb the
fiscal and external deficits. Rajapaksa said growth should
return to 8.0 percent annually after 2013.
Inflation is expected to slow to 7 percent in 2013, based on
money supply growth of 14 percent and favourable food supplies.
Inflation in October was running at 8.9 percent from a year
FISCAL DEFICIT, DEBT, BALANCE OF PAYMENTS
The government aims to reduce the fiscal deficit to 5.8
percent of the gross domestic product in 2013 and 4.5 percent in
2015, after meeting a target of 6.2 percent for 2012.
Sri Lanka has been reducing its fiscal deficit under the
terms of a loan agreement with the International Monetary Fund.
The deficit has fallen from 6.9 percent in 2011 and 8.0 percent
Rajapaksa said the government aimed to reduce Sri Lanka's
debt to GDP ratio to 75 percent in 2012 from an estimated 78.5
percent this year.
The president said measures would be taken to encourage
exports and discourage imports to reduce a balance of trade
deficit and increase foreign exchange reserves.
CAPITAL MARKET DEVELOPMENT
The president offered a three-year half tax holiday for new
companies that will be listed in Colombo Stock Exchange
before December 2013 and maintain a minimum of 20 percent float.
FOREIGN EXCHANGE MANAGEMENT, DEVELOPMENT FINANCE
Rajapaksa proposed allowing corporate entities and licensed
commercial banks to borrow $10 million and $50 million
respectively per annum without approval from the Exchange
Control Department to mobilise their funding requirements from
the global financial markets over the next three years.
He also proposed development banks raise over 10-year
foreign development finance up to $250 million to provide long
term funding for small and medium-sized businesses. The
government will underwrite the exchange risk of such borrowing.
REDUCTION OF IMPORTS, EXPORT PROMOTION:
Rajapaksa said the government sought to reach zero level
imports in several farm products, including red onions and
maize, by 2015 and proposed high taxes and stringent quality
controls on imports.
High taxes have been proposed in order to save $350 million
spent on milk powder imports per annum.
The president also proposed a two-year depreciation
allowance for export manufacturers, including the apparel
industry, to modernise with advanced technology, machinery and
accessories to maintain higher quality production.
LAND FOR FOREIGNERS:
Rajapaksa said sale of state land to foreigners will be
prohibited. Lease of state land will be permitted for foreigners
subject to the payment of 100 percent tax on the lease for the
entire lease period.
(Reporting by Shihar Aneez and Ranga Srilal; Editing by Simon
Cameron-Moore and Ron Popeski)