Keep Us Strong WikiLeaks logo

Currently released so far... 97115 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ETRD EAGR ETTC EAID ECON EFIN ECIN EINV ELAB EAIR ENRG EPET EWWT ECPS EIND EMIN ELTN EC ETMIN EUC EZ ET ELECTIONS ENVR EU EUN EG EINT ER ECONOMICS ES EMS ENIV EEB EN ECE ECOSOC EK ENVIRONMENT EFIS EI EWT ENGRD ECPSN EXIM EIAD ERIN ECPC EDEV ENGY ECTRD EPA ESTH ECCT EINVECON ENGR ERTD EUR EAP EWWC ELTD EL EXIMOPIC EXTERNAL ETRDEC ESCAP ECO EGAD ELNT ECONOMIC ENV ETRN EIAR EUMEM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID EREL ECOM ECONETRDEAGRJA ETCC ETRG ECONOMY EMED ETR ENERG EITC EFINOECD EURM EENG ERA EXPORT ENRD ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EGEN EBRD EVIN ETRAD ECOWAS EFTA ECONETRDBESPAR EGOVSY EPIN EID ECONENRG EDRC ESENV ETT EB ENER ELTNSNAR ECHEVARRIA ETRC EPIT EDUC ESA EFI ENRGY ESCI EE EAIDXMXAXBXFFR EETC ECIP EIAID EIVN EBEXP ESTN EING EGOV ETRA EPETEIND ELAN ETRDGK EAIDRW ETRDEINVECINPGOVCS EPEC ENVI ELN EAG EPCS EPRT EPTED ETRB EUM EAIDS EFIC EFINECONEAIDUNGAGM EAIDAR ESF EIDN ELAM EDU EV EAIDAF ECN EDA EXBS EINTECPS ENRGTRGYETRDBEXPBTIOSZ EPREL EAC EINVEFIN ETA EAGER EINDIR ECA ECLAC ELAP EITI EUCOM ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID EARG ELDIN EINVKSCA ENNP EFINECONCS EFINTS ECCP ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD ECONEINVEFINPGOVIZ ENERGY ELB EINDETRD EMI ECONEFIN EIB EURN ETRDEINVTINTCS EIN EFIM ETIO ELAINE EMN EATO EWTR EIPR EINVETC ETTD ETDR EIQ ECONCS EPPD ENRGIZ EISL ESPINOSA ELEC EAIG ESLCO EUREM ENTG ERD EINVECONSENVCSJA EEPET EUNCH ECINECONCS ETRO ETRDECONWTOCS ECUN EFND EPECO EAIRECONRP ERGR ETRDPGOV ECPN ENRGMO EPWR EET EAIS EAGRE EDUARDO EAGRRP EAIDPHUMPRELUG EICN ECONQH EVN EGHG ELBR EINF EAIDHO EENV ETEX ERNG ED
KMDR KPAO KPKO KJUS KCRM KGHG KFRD KWMN KDEM KTFN KHIV KGIC KIDE KSCA KNNP KHUM KIPR KSUM KISL KIRF KCOR KRCM KPAL KWBG KN KS KOMC KSEP KFLU KPWR KTIA KSEO KMPI KHLS KICC KSTH KMCA KVPR KPRM KE KU KZ KFLO KSAF KTIP KTEX KBCT KOCI KOLY KOR KAWC KACT KUNR KTDB KSTC KLIG KSKN KNN KCFE KCIP KGHA KHDP KPOW KUNC KDRL KV KPREL KCRS KPOL KRVC KRIM KGIT KWIR KT KIRC KOMO KRFD KUWAIT KG KFIN KSCI KTFIN KFTN KGOV KPRV KSAC KGIV KCRIM KPIR KSOC KBIO KW KGLB KMWN KPO KFSC KSEAO KSTCPL KSI KPRP KREC KFPC KUNH KCSA KMRS KNDP KR KICCPUR KPPAO KCSY KTBT KCIS KNEP KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KGCC KINR KPOP KMFO KENV KNAR KVIR KDRG KDMR KFCE KNAO KDEN KGCN KICA KIMMITT KMCC KLFU KMSG KSEC KUM KCUL KMNP KSMT KCOM KOMCSG KSPR KPMI KRAD KIND KCRP KAUST KWAWC KTER KCHG KRDP KPAS KITA KTSC KPAOPREL KWGB KIRP KJUST KMIG KLAB KTFR KSEI KSTT KAPO KSTS KLSO KWNN KPOA KHSA KNPP KPAONZ KBTS KWWW KY KJRE KPAOKMDRKE KCRCM KSCS KWMNCI KESO KWUN KPLS KIIP KEDEM KPAOY KRIF KGICKS KREF KTRD KFRDSOCIRO KTAO KJU KWMNPHUMPRELKPAOZW KEN KO KNEI KEMR KKIV KEAI KWAC KRCIM KWCI KFIU KWIC KCORR KOMS KNNO KPAI KBWG KTTB KTBD KTIALG KILS KFEM KTDM KESS KNUC KPA KOMCCO KCEM KRCS KWBGSY KNPPIS KNNPMNUC KWN KERG KLTN KALM KCCP KSUMPHUM KREL KGH KLIP KTLA KAWK KWMM KVRP KVRC KAID KSLG KDEMK KX KIF KNPR KCFC KFTFN KTFM KPDD KCERS KMOC KDEMAF KMEPI KEMS KDRM KEPREL KBTR KEDU KNP KIRL KNNR KMPT KISLPINR KTPN KA KJUSTH KPIN KDEV KTDD KAKA KFRP KWNM KTSD KINL KJUSKUNR KWWMN KECF KWBC KPRO KVBL KOM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KEDM KFLD KLPM KRGY KNNF KICR KIFR KM KWMNCS KAWS KLAP KPAK KDDG KCGC KID KNSD KMPF KPFO KDP KCMR KRMS KNPT KNNNP KTIAPARM KDTB KNUP KPGOV KNAP KNNC KUK KSRE KREISLER KIVP KQ KTIAEUN KPALAOIS KRM KISLAO KWM KFLOA
PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS

Browse by classification

Community resources

courage is contagious

Viewing cable 03COLOMBO2027, Guns to Butter (and Pay Hikes, and Roads, and...):

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #03COLOMBO2027.
Reference ID Created Released Classification Origin
03COLOMBO2027 2003-11-24 08:37 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Colombo
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 03 COLOMBO 002027 
 
SIPDIS 
 
DEPT PASS TO SA/INS, SA/RA, EB, USTR; COMMERCE FOR ARI 
BENAISSA; TREASURY FOR ROY ADKINS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV CE ECONOMICS
SUBJECT: Guns to Butter (and Pay Hikes, and Roads, and...): 
Optimistic Budget Reopens Sri Lankan Parliament 
 
REF: Colombo 2001 
 
1. (U) This telegram is Sensitive but Unclassified, please 
handle accordingly. 
 
2. (SBU) Summary: Finance Minister Choksy presented the 
2004 GSL budget to the Parliament on November 19.  The GSL 
sees the budget as the culmination of two years' work and a 
chance to relieve belt-tightening measures taken since 
coming to office.  The budget keeps within the tight 
macroeconomic framework established by the government, 
including deficit reduction, revenue enhancement and pro- 
growth initiatives.  Still, it included significant wage 
increases for the public sector, a generous voluntary 
retirement package and additional agricultural subsidies. 
Revenue collection is acknowledged as a major fiscal 
problem and the budget includes several measures to tackle 
this challenge.  Most observers consider the budget fair 
and even opposition politicians privately admit it is a 
move in the right direction.  The lack of any notable 
education initiatives is interesting, given stated GSL 
priorities.  Defense expenditures continued to decline as a 
share of budget and GDP.  End Summary 
 
3. (U) The Finance Minister presented a budget to a 
somewhat raucous Parliament on November 19.  Para 16 
contains relevant figures and projections discussed in this 
cable. 
 
Parliament Reconvenes to Hear the Budget 
---------------------------------------- 
4. (SBU) Parliament had reconvened the morning of November 
19, following a 15 day suspension by President Kumaratunga 
(Reftel).  Minister Choksy, a diminutive, professorial 
politician, read a two-hour speech to the entire 
parliament, including the Prime Minister.  The session was 
lively.  Clearly suffering from a cold, Choksy took 
frequent breaks to blow his nose, which prompted catcalls 
from the opposition about whatever item he had just 
discussed.  The GSL used the session to crow about its 
economic performance and complain about the President's 
recent political actions. 
 
GSL Economic Achievements Touted 
-------------------------------- 
5. (U) The Minister highlighted the GSL's economic 
achievements including significantly improved GDP growth, 
debt and deficit reduction, and increased exports.  FDI has 
also increased and the resulting foreign exchange inflows 
have led to a reversal of the rupee's three-year slide. 
Both interest rates and inflation have declined. 
 
Expenditures to Fall 
-------------------- 
6. (U) On the expenditure front, the government expects a 
contraction of about 1% of GDP.  Budget forecasts for 2004 
project a historically low budget deficit (the deficit has 
not been lower than 7.5% since the 1977 opening of the 
economy).  The overall deficit is to be financed by foreign 
grants, foreign borrowings, domestic financing and 
privatization receipts.  Recurrent expenditures are slated 
to fall, leading to a reduction in the current account 
deficit.  Capital expenditures are projected to increase. 
Total interest costs, which accounted for 30% of government 
spending in 2003, are expected to fall to about 27% in 
2004.  Spending on government corporations will also drop. 
Other administrative costs are expected to decline 
marginally.  Defense will represent just under 15% of total 
expenditure, continuing its decline as a share of 
expenditure since the 2002 ceasefire.  Though keeping a 
tight rein on spending, the GSL recognizes the need to 
boost the economy and upgrade infrastructure.  Therefore, a 
key component to the new budget is. 
 
Capital spending 
---------------- 
7. (U) The GSL plans to spend $1.1 billion in 2004 on 
infrastructure as part of a larger 3-year development 
program under the PM's "Regaining Sri Lanka" development 
plan.  Roads, power and water sectors, rehabilitation and 
resettlement, and lending to small and medium industry will 
receive the highest allocations from the government budget. 
The GSL expects to spend a total $4.1 billion on capital 
projects from 2004-2006. 
Public Sector Employee Benefits 
------------------------------- 
8. (U) The budget provides a salary increase to government 
employees and pensioners.   It also unveiled a costly plan 
to overhaul the bloated civil service.  The plan aims to 
reduce 100,000 state jobs in 2004, and a further 200,000 by 
2006 (cutting the total workforce by almost 30%).  The plan 
calls for a voluntary retirement package, for employees 
over 45 years old, including an initial payment of one 
year's salary, full monthly salary until age 55 and then a 
full pension.  In addition, the government has promised a 
debt forgiveness plan for public employees.  The savings 
from the package will result largely from the reduction in 
benefits including allowances, vehicles, and housing in 
some instances.  There could also be efficiencies gained 
from cutting the bloated bureaucracy (less overlap, fewer 
benefits and employees to monitor). 
 
Revenue to Rise 
--------------- 
9. (U) Choksy admitted a key problem in the budget is 
sluggish revenue.  The government has tried to boost 
revenues and broaden the tax base, but without much 
success.  In 2003, revenue did not meet expectations, but 
the GSL is projecting a nominal rise of 13 percent in 2004, 
a reasonable target given projected GDP growth and 
inflation.  Choksy outlined several glaring revenue 
realities, including the fact that a recent tax amnesty 
netted 51,000 tax evaders who will now be captured in the 
tax net.  Moreover, fewer than 3,000 of 32,000 registered 
companies pay taxes and only one percent of individual 
income earners are taxpayers.  Key to improving this 
revenue picture will be. 
 
 
Taxation 
-------- 
10. (U) Vowing to broaden the tax net, Choksy proposed a 
new economic service charge of 1% to be levied on all 
registered companies (including currently tax-free BOI 
companies).  This tax would be deductible from the 
corporate tax, but would increase revenues by bringing into 
the tax net thousands of tax evading companies. Other key 
tax reforms in the 2004 budget include a unified VAT rate, 
reduction of the import duty surcharge and an increased 
income tax exemption threshold.  Several other proposals 
aimed to increase collection from the business sector, 
including BOI companies.  They include a tax on previously 
exempt foreign currency banking units and a royalty tax on 
new foreign companies.  The GSL intends to address the 
weaknesses in tax administration through the establishment 
of a central revenue authority. 
 
Privatization and Private Sector Development 
-------------------------------------------- 
11. (U) The Government will continue its privatization 
program.  Companies listed for privatization in 2004 
include State Mortgage and Investment Bank, the petroleum 
sector, bus companies, hotels, remaining shares of 
plantations and Sri Lanka Telecom.  Total expected income 
is $154 million. 
 
12. (U) The private sector will benefit from increased 
government spending on infrastructure.  In addition, the 
government is to lend $361 million for small and medium 
industry development and to fund northeast development. 
Other programs will facilitate private sector activity in 
selected sectors.  To boost tourism, the government will 
facilitate the development of two lagoon areas and the 
southern province (airport, port, coal power plant, and an 
oil refinery); BOI will set up two new export processing 
zones and the government will make land available for 
development within Colombo. 
 
Comment 
------- 
13. (SBU) The budget was well-received and got fairly 
glowing commentary from the IMF (which had announced that 
Article IV consultations would be delayed until the budget 
was presented), World Bank and ADB reps in Colombo.  Local 
businesses have been enthusiastic as well.  Particularly 
interesting was the lack of many education initiatives, 
which get tremendous lip service from the GSL.  The decline 
in defense spending corresponds with optimism about the 
peace process. 
 
14. (SBU) The GSL had leaked portions of the budget plan, 
specifically public sector wage increases and increased 
agricultural subsidies, following the President's 
suspension of parliament.  This provided additional 
pressure to reconvene parliament and was used by the GSL in 
its litany of ways the President's actions had undermined 
the economy. 
 
15. (SBU) Members of the opposition used the budget hearing 
as a forum to voice their displeasure with the GSL and to 
advocate for more left-leaning social spending programs. 
In private though, most admit the budget is fair and well 
crafted, balancing the need to maintain fiscal restraint 
while showing the public some return after two years of 
austerity. End Comment. 
 
16. (U) Some numbers: 
20032004 (Proj) 
-------- 
GDP Growth5.6%6.0% 
Budget Deficit(% GDP)7.8%6.8% 
Debt (% GDP)100%95% 
Inflation7.2%6.9% 
Current Acct Deficit (% GDP)2.8%1.3% 
 
--Forex reserves - $3 Billion (5.2 mos import cover) 
--Inflation declined to 7.2% from 9.6% in 2002 
--Interest rates dropped to 9.4% from about 12% 
--Revenue fell in 2003 from a projected 17.1% of GDP to 
16.3%.  In 2004, revenue is to rise by 13.7% in nominal 
terms (to 16.4% of GDP). 
--For 2004, total spending is estimated at $4.8 billion, or 
23.2% of GDP, resulting in a budget deficit of $1.4 billion 
(6.8% of GDP). 
--Capital expenditure will increase from $927 million (5.0% 
rease from $927 million (5.0% 
of GDP) to $1.1 billion (5.3% of GDP). 
Deficit Finance: foreign grants ($103 million); foreign 
borrowings ($515 million); domestic financing ($670 
million); privatization receipts ($154 million). 
--Single VAT rate of 15% (replacing the current system of 
10% and 20%) 
--Cut in import duty surcharge to 10% from 20%. 
LUNSTEAD