Sri Lanka's 2011 budget has been made to keep the economy stable allowing monetary policy to maintain low inflation and also speed the country towards a knowledge economy, Treasury Secretary P. B. Jayasundera said.
"This entire fiscal strategy is to bring stability in macro terms," he told a seminar organized by the Institute of Chartered Accountants of Sri Lanka.
"Consolidate the low interest rate regime, consolidate the exchange rate strategy, and for the monetary fiscal co-relations to be established."
He said several taxes have been removed, setting the path to a less complicated tax structure.
The Secretary said each budget was not meant to be used to change taxes by gazette notification, and people have to learn to live within the stable tax framework. Taxes should be changed only if they do not work, he said.
"The country has after 25 years got to inflation of 5 to 6 percent," Jayasundera said.
"That 5.0 to 6.0 percent inflation means the cost of living is rising but at a lower rate in comparison to 20-30 percent which we had in the past. The country is also growing at 8.0 percent."
He said the budget also gave incentives and a platform for a knowledge economy. With a strong exchange rate, the time for currency depreciation and cheap labour was at an end.
He said double deductions were given for research, training and training institutions and the delivery of professional services of all kinds were encouraged and with the end of a war, international firms were encouraged to set up shop in Colombo.
Even agriculture and fisheries was encouraged to bring in new technology. Sri Lanka's food prices are among the highest in the world, despite tens of billions of rupees being pumped into fertilizer subsidies, he said.
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