Saturday, March 06, 2010

How Lankans pay for war against LTTE

Premier Ratnasiri Wickremanayake has attributed the high cost of living in Sri Lanka to large payments being made to other countries for weapons purchased to fight the recently-concluded war with Liberation Tigers of Tamil Eelam (LTTE).

The final phase of the Eelam IV war had concluded in May last year, with the killing of LTTE supremo Velupillai Prabhakaran.

"We are yet to complete payment of the bill on certain things that were provided to us by other countries as assistance for the humanitarian operations," Wickremanayake said, adding it is not proper to expect the government will have enough money immediately after such a protracted war.

"The people should be made aware of this. Some think that since this is now over, the money will be saved. They also think the prices of goods can be reduced and various other forms of relief can be granted," he said.

But we still have to pay many bills, the Prime Minister insisted.

"Therefore, we cannot reduce the prices of goods very drastically in line with world market prices. But we can provide concessions. We have even provided tax concessions on
certain goods," he told a recent meeting in Horana in Western Sri Lanka.

However, economists have argued that the government could have reduced prices of certain commodities
when prices remained weak in the international market last year.

Wickremanayake also stressed that the government hoped to implement a rapid development programme after the April 8 general election to fulfil the aspirations of the public.

Meanwhile, the state radio quoted the Prime Minister as saying that the argument that cost of living should come down soon after the war was over, was not correct.

He explained that it is not practical to reduce cost of living immediately as the government has to pay large amount of money for weapons that were bought during the war time, the Sri Lanka Broadcasting Corporation reported.

Sri Lanka has exceeded the 2009 budget deficit target of 7 per cent of Gross Domestic Product (GDP) provided for under an International Monetary Fund (IMF) programme as it rose to 9.7 per cent during the period, according to an official report.

"While the short term economic stabilisation aspect of the IMF programme has been achieved, the government continues to remain engaged with the Fund to address medium term economic recovery in the context of post-war economic prospects and global economic recovery," said the Sri Lankan Ministry of Finance and Planning in its 'Pre-Election Budgetary Position Report' released recently.

Accordingly, the release of the third tranche of IMF loan amounting to USD 326 million will be delayed till the review is completed, as at this stage there is no urgent requirement to further strengthen external finances, it said.


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