Salary hike nullified by devaluation, inflation – Wickremeratne

November 21, 2011, 10:41 pm ,The Island,

by Zacki Jabbar

The Mahinda Rajapaksa government’s 2012 budget had true to form bluffed the working class, once again, by devaluing the rupee and then granting a 10 percent salary increase to public servants, UNP MP Eran Wickremeratne said yesterday.

He told The Island that with inflation officially at six percent, though it was much higher and the rupee devalued by three percent, there had in effect been no salary hike and could possibly work out to a deduction in wages.

Asked about his overall perception of the 2012 budget which was presented by President Mahinda Rajapaksa, in his capacity as Finance Minister, amidst fisticuffs in parliament yesterday, Wickremeratne said that it was inflationary and the rupee devaluation would make imports cost higher, resulting in the common man being strangled further.

He noted that deficit financing was the underlying theme of the 2012 budget and with the unofficial inflation figure much higher than the official position, the cost of living was bound to rise further.

The Revival of Underperforming Enterprises and Underutilised Assets, was the most obnoxious piece of legislation to be passed in recent times, Wickremeratne said adding that its presentation in parliament as an ‘Urgent Bill’ had prevented any public debate.

He said that the Act was being used to take over lands of privatized companies, in direct violation of the agreement’s they had entered into with the State. At a time when local and foreign investments should be encouraged, the wrong signals being sent out were detrimental to economic development, Wickremeratne observed.

State workers get 10% pay hike

Rupee devalued by 3 per cent
Rs. 230 bn for security forces
Pensions up by at least Rs. 500
Rs. 37,000 mn for Northern railway
Rs.100 mn for legal aid to poor
Concessions for SMEs, strategic sectors

November 21, 2011, 10:36 pm ,The Island.

By Saman Indrajith

President Mahinda Rajapaksa, presenting his government’s seventh consecutive budget, yesterday offered the State sector workers a ten percent salary hike, a three percent devaluation of the rupee to encourage exports and reduce import costs, all taxes were removed from sports goods to encourage sports, vehicle duty for tourism was cut by 50 per cent and in order to become self sufficient other than in rice, a high cess was proposed on a number of pulse imports.

It was also the 65th budget of Sri Lanka that was presented to Parliament yesterday by the President as the Finance Minister.

The budget deficit that has prevailed for a long period of time due to recurrent expenditure exceeding government revenue has been reduced to Rs 1.8 billion in 2012. This was a big drop from a deficit of Rs 120 billion in 2010, the president said.

A ten percent salary increment has been proposed for the Public sector including the military.

A sum of Rs 496 billion had been allocated in 2012 to take forward the development projects. "I was therefore able to include a number of development proposals suggested by the Members of Parliament in various fields such as highways, irrigation, electricity, water resources, education and health into this budget speech," he said.

"We need to reduce the import cost and increase export revenue. When our currency has strengthened, our trading partners’ currencies have depreciated. So I propose to devalue the currency by 3 percent with effect from today", the President announced "We have been able to maintain the growth rate at 8 percent in 2011, the same as in 2010. In the Northern region, it is reported that the growth is 23 percent, well beyond 8 percent." Last year, economic activity in the former war zone — which was under the control of Tamil Tiger separatists for decades until the Sri Lankan military defeated them in 2009 — grew at a 14.2 rate.

"In addition to rice, we need self-sufficiency in green gram, peanuts, ginger, and corn in order to achieve food security. So I propose a high cess on imports of these products."

"Vehicle registration charges will be revised while they will be increased for luxury vehicles in order to increase revenue of provincial councils." He also said tourism vehicle import duties will be cut by 50 percent"

"We have allocated 30 billion rupees ($271.8 million)for the inter provincial road network."

"We can be the regional sports hub and that can help to strengthen our economy. I propose 500 million rupees for development of infrastructure complexes and all sport goods will be tax-free in order to encourage sports."

"We have decided to impose a visa fee of $10 per person from the SAARC (South Asian Association for Regional Cooperation) region countries and $20 from the other regions’ visitors. There won’t be any charge on children to encourage family tourism. Tourists who spend a minimum of 48 hours also won’t be charged. This will give additional revenue of 2 billion rupees."

Of 230 billion rupees allocated to defense, 203 billion or 88 percent will be spent on salaries, food and uniforms.

"Now we have identified 37,000 acres of land under the plantation industries which are not used. These identified lands will be handed over to identify families for a 30-year lease, 2 acres each to develop small estates with lending facilities and seeds," the President added.