7.8.2008
Formulation
of Budget for the year 2009
Cabinet has granted approval to a memorandum submitted
by His Excellency President Mahinda Rajapaksa for the
formulation of Budget for the year 2009.
Accordingly approval was granted to formulate the budget
adhering to the directions and guidance spelt out in the
National Budget Circular No. 139 and under the Mahinda
Chinthana Policy Framework, and for the Parliamentary
Programme for the Appropriation Bill 2009.
Arrangements are being made to formulate the Budget 2009
based on Mahinda Cbinthana: Vision for Sri Lanka: A Ten
year Horizon Developmmt framework 2006-2016. The year
2009 is the fourth year of the Ten year Horizon Developmmt
framework and the Budget 2009 is expected to be formulated
in a Medium Term Expenditure Framework (MTEF) with a view
to ensuring further the said developmmt policies.
The National Budget Circular No. 139 was issued on July
24, 2008 to all Secretaries to Ministries, Chief Secretaries
of Provisional Councils and Heads of Departments and all
ministers are required to guide their Ministries, Departments
and other institutions accordingly.
The National Budget Circular No.139 is issued by the
Treasury setting out directions and guidance on the formulation
of Budget 2009. Parliamentary Programme for the Appropriation
Bill 2009 is prepared in accordance with Article 121 of
the Constitution and the Standing Order No. 70 of Parliament.
Supply of material for school uniforms
Cabinet granted approval to memorandum submitted by Minister
of Higher Education, Susil Premajayantha to supply uniform
materials for students for year 2009.
Material for school uniforms will be provided free for
all of students who study in Government and Government
Assisted Schools and robe material for student monks in
Government Approved Pirivenas. This is an island-wide
programme implemented continuously by the Ministry of
Education since the Year 1993.
Supplying uniform material freely especially for under
privileged students is seen an incentive for attendance.
The ministry has stressed that the process will be free
of discrimination of any kind.
Accordingly, approval was granted for the purchase of
a quantity of 10, 450,000 meters required for this purpose
from the local manufacturers through the Ministry of Textile
Development.
The amount to be incurred in the distribution of school
uniform material for year 2009 is estimated to be approximately
Rs. 1260 million.
Restructuring salaries in the public service in terms
of the budget proposals of 2006
Cabinet granted approval to a memorandum submitted by
the Secretary of the Ministry of Public Administration
and Home Affairs to restructure the salaries in the Public
Service in terms of the Budget Proposals 2009.
In order to rectify the anomaly, it has been decided,
to grant 3 salary increments (Rs.790x3 ) of grade II to
the officers, who had been promoted before 01.01.2006
to grade 11/1 or II of an All Island Service or in any
other post drawing equivalent salary and further remaining
in the same grade on the said date after converting their
salaries to SL-I-2006, if they have fulfilled the requirements
given below.
(a) Should have been in receipt of a salary on the salary
scale of TB-6-1 by 31-12-2005.
(b) Should have served in a grade assigned with a salary
scale of TB-5-1-2 or a corresponding salary scale which
had been in force earlier, before been promoted to the
grade assigned with the salary scale ofTB-6-1.
(c) Should have served for a period of not less than 10
years in the salary scale of TB1-2 or in a salary scale
corresponding to it and should have earned all the salary
increments relating to the particular salary scale when
the above promotion was made.
Action will be taken as given below in respect of officers
who have fulfilled the requirements mentioned above and
promoted prior to 01.01.2006 to Class I of an All Island
Service or any post assigned with the equivalent salary,
that is TB-7-1 and remained in same grade on that prescribed
date.
To convert the salary of officers to the salary scale
relevant to Class I on hypothetical basis by adding 3
salary increments (based on the value of grade II or 1111)
based on the incremental value as applicable to the date
of promotion, to the salary drawn last by officers whilst
in grade II or Il/I.
b) Thereafter, grant salary increments on hypothetical
basis, if the salary increments have subsequently been
earned up to 31.12.2005 and subsequently place on the
salary step relating to the Grade I of the SL-! -2006
salary scale corresponding to the salary step, of the
salary scale TB-7 -1 with effect from 01.01.2006 on hypothetical
basis.
This circular is issued with the concurrence of the National
Salaries and Cadre Commission and the General Treasury.
Approvalfor sri lanka to join the International Tea Producers'
Forum (ITPF)
Cabinet granted approval to memorandum submitted by Minister
of Plantation, D.M. Jayaratne to obtain membership of
the International Tea Producers Forum (ITPF), to pay the
membership fee which is expected to be around US$ 10,000-20,000
which will be calculated based on a formula combining
both production and exports and to authorize the Secretary
of the Ministry of Plantation Industries or a nominee
to sign the Agreement on behalf of the Government of Sri
Lanka.
At the 17th Session of the Inter-Governmental Group (lGG)
on Tea of the Food and Agriculture Organization (F AO)
held in Nairobi, Kenya in 2006, the main tea producing
and exporting countries namely, India, Sri Lanka, Kenya,
Bangladesh, Nepal and Indonesia had agreed informally
to establish an International Tea Producing Countries
Forum (ITPF).
This proposal had been further pursued with more tea
producing/exporting countries at the International Tea
Conventions in Colombo in August 2007 and in India in
December 2007.
At the 18th FAO/IGG Session held in China in May 2008,
this matter has been further discussed in detail and had
signed an MOD for the formation of such a forum. The countries
that had signed the MOD were Bangladesh, India, Kenya,
Malawi, Tanzania, Zimbabwe, Burundi and Sri Lanka. These
countries produce almost 82% of the global tea production.
Formation of International Forum for tea producing countries
will strengthen the bargaining power of those countries,
as they can have common forum. Also this forum can be
vigilant of future threats such as over-supplying situations
and unreasonable demands from tea consumer countries,
and take precautionary measures on time to overcome them.
Through the membership of this forum, Sri Lanka, as a
producer and exporter will be able to share experiences,
knowledge in research and development and technology in
both production and marketing.
Avoiding double taxation and the prevention of the fiscal
evasion with respect to taxes on income between SL and
India
Cabinet granted approval to a memorandum submitted by
Mahinda Rajapaksa as the Minister of Finance and Planning
to sign the draft Agreement at Government level and to
present it in Parliament for approval in terms of Section
97(1)(a) of the Inland Revenue Act No. 10 of 2006.
This new draft Agreement signed at officials' level on
June 28, 2006 in Colombo provides for strengthening of
source country jurisdiction as well as for more incentives
to promote capital inflows and transfer of technology
in to the country. In line with the Government policy
to conclude a Comprehensive Economic Partnership Agreement
to expand the scope of the existing Indo - Sri Lanka Free
Trade Agreement, this new Double Tax A voidance Agreement
was negotiated and concluded to replace the existing Agreement
which was entered into in 1982.
No tax is levied on (domestic) dividends in India under
their domestic law, and as the tax rate applicable to
the first taxable income bracket of Rs. 300,000/- is 5%
in Sri Lanka, the request made by the Indian Government
to reduce the rate on dividends was considered and fixed
at 7.5%. At the same time, a provision has been included
in the protocol to the Agreement to reconsider this tax
rate on dividends after three years from the date that
the Agreement entered into force.
This draft Agreement is generally in consistent with
the Sri Lanka's recently concluded tax treaties and interest
and royalties are taxed at 10%. As regard the shipping
profits the source principal has been retained with reduction
of tax chargeable on such profits by 50% considering the
geographical position and future prospects for the industry.
The loss of revenue resulting from the concession offered
will be marginal. The benefits arising to the country,
the promotion of foreign investments and earnings of foreign
exchange are likely to be more than any immediate reduction
in revenue.
National Highways Sector Project (Rehabilitation and upgrading
of roads)
Cabinet granted approval to a memorandum submitted by
His Excellency President Mahinda Rajapaksa for the implementation
of Asian Development Bank (ADB) funded national highway
sector project rehabilitation and upgrading of Peradeniya-Badulla-
Chenkaladi road from Nuwara Eliya to Badulla.
Accordingly the contract for Rehabilitation and Upgrading
of Peradeniya-Badulla Chenkaladi Road from Nuwara Eliya
to Badulla will be awarded to Keangnarn Enterprises Ltd.
for a contract sum of Sri Lankan rupees 5,318,471,154.04
(without VAT).
Having considered the recommendation of the TEC, the
Cabinet Appointed Procurement Committee (CAPC) on 8th
May 2008 decided to recommend to the Cabinet of Ministers
to award the contract for Rehabilitation and Upgrading
of Peradeniya-Badulla Chenkaladi Road• from Nuwara
Eliya to Badulla to the lowest evaluated substantially
responsive bidder, to Messrs. Keangnam Enterprises Ltd.
for a Contract Sum of LKR. 5,318,471,154.04 (without VAT).
Concurrence was also obtained from the ADB.
According to the loan agreement, a sum of US$ 115.1 million
has been allocated to rehabilitation and upgrading of
four road packages and a portion of this to be utilized
for the eligible payments related to Contract Packages
- ICB 03 - SLR 5,318,471,154.04.
Funds for the operation of Embilipitiya and Valaichehenai
Paper Mills
Cabinet granted approval to a memorandum submitted by
His Excellency President Mahinda Rajapaksa in his capacity
as the Minister of Nation Building and Estate Infrastructure
Development to obtain grants for from the General Treasury
of Rs. 36.36 million to ensure that the Embilipitiya and
the Valaichchenai Paper Mills function properly.
The Cabinet of Ministers having considered the Cabinet
Paper submitted by the Ministry of Nation Building and
Estate Infrastructure Development (No. 08/0662/304/011
dated 31-03-2008) granted approval,
(1) to convert the Embilipitiya Paper Mills as a Joint
Venture
(2) to extend the date of compulsory retirement in respect
of the employees of Embilipitiya Paper Mills and the Head
office upto 1st July 2008.
(3) to allocate Rs. 36.36 million by the General Treasury
for payment
of salaries of the employees for the three months from
April 2008
to June 2008 and
(4) to convert the to convert the Valaichchenai Paper
Mills of National Paper Company Limited into the Valaichchenai
Paper Company Limited under the Ministry of Nation Building
and Estate Infrastructure Development.
The conversion of Embilipitiya Paper Mills as a Joint
Venture is being worked out. Necessary repair works of
the machinery commenced on 20-062008 and a test run is
to be held shortly so that the operation of the Mills
could be shown to the Joint Venture partner.
The Valaiehehenai Paper Mills resumed operation on May
7, 2008 producing paper and paper board items. Production
for May was 200 Metric tons and for June was 356 Metric
tons. The total revenue earned for May and June were Rs.
12. 6 Million and Rs. 23 Million respectively. Production
cost is high due to the recent increase of the price in
furnace oil. Therefore it has been decided to switch on
for multi-fuel boiler and tenders were called for the
supply of multi-fuel boiler. Six (6) Tenders were received
and the lowest price quoted was RS.19.5 Million. Procurement
process and installation of a new multi-fuel boiler will
take at least 3 to 4 months.
Reward funds to the Officers in the rank of Chief Inspector
and in the lower ranks
Cabinet granted approval to a memorandum submitted by
His Excellency President Mahinda Rajapaksa in his capacity
as the Minister of Defence, Public Security, Law and Order
to provide benefits of the Police Reward Fund to the Officers
in the Rank of Chief Inspector of Police and to those
who are in the lower ranks.
Accordingly Sub-section 6(11) has to be inserted immediately
after the Section 6(1) of the Regulation stated under
Article 73 of the Police Ordinance published in the Gazette
No. 107 of 11th April, 1974 for the purpose of providing
benefits of the Police Reward Fund to the Chief Inspectors
of Police and the officers of lower ranks.
Anusha Palpita
Director of Government Information