Sri Lanka to pay extra to local contractors
Feb 04, 2010 (LBO) – Sri Lanka’s government will allow local contractors to bid 15 percent higher than foreign ones in state projects paid for with money raised from the people domestically, a government minister said.
“Priority preference for local bidders for projects with local funding has been increased to 15 percent,” minister Gamini Lakshman Pieris told reporters.
“Already a 10 percent preference is given.”
Pieris said the cabinet of ministers had decided to increase the price advantage given to local contractors on a proposal by President Mahinda Mahinda Rajapaksa, who is also the finance minister.
The extra payment would be made only for projects financed with money raised domestically.
A government raises money from the people through taxes, borrowings locally, printing (central bank credit) or from abroad.
Many projects financed by multilateral agencies require international competitive bidding to get the lowest price.
But bi-lateral loans from foreign governments sometimes limit them to bidders from their own country.
There has been some unhappiness among local contractors at projects funded by China which are built by Chinese contractors and where even part most of the labour is imported.
Sri Lanka overall budget deficit nears 10.3-pct of GDP in 2009
Mar 02, 2010 (LBO) – Sri Lanka’s budget deficit for 2009 has exceeded 10.2 percent of gross domestic product (GDP), with a planned 7.0 percent deficit derailed by falling revenues and higher expenditure, a finance ministry report said.
A fiscal report released ahead of elections due in April said the budget deficit financed from borrowings only (after grants) had expanded to 9.7 percent of GDP or 469.6 billion rupees in 2009 from a target deficit of 342.8 billion rupees or 7.0 percent of GDP.
The overall deficit target in the report corresponds to a 7.5 percent of GDP budget deficit with grants against a revised 7.0 percent deficit agreed with the International Monetary Fund in July 2009, including grants.
The pre-election report also has a revenue deficit target of 100.9 billion rupees or 2.8 percent of GDP.
The targets in the pre-election report do match revised July 2009 budget targets released by the IMF, later published by the Central Bank in its Recent Economic Development report in November 2009 or contained in statements made by senior public officials.
The presentation of the budget format had also been changed to a deficit without grants making it even more difficult for citizens of Sri Lanka to compare the budget data with prior years.
But against revised July 2009 targets published earlier, the overall budget deficit for 2009 had expanded to 495.1 billion including grants of 25.48 billion rupees, up from a planned 346.4 billion rupees in the revised July budget.
This is close to 10.3 percent of an estimated 4,800 billion nominal GDP for 2009 implied in the pre-election report.
The pre-election fiscal report said the revenue deficit (the gap between total revenues and current expenditure) was 182.5 billion rupees (3.8 percent of GDP) and capital expenditure was 6.5 percent of GDP taking the total budget gap to 10.3 percent.
The numbers were provisional, indicating that the final out-turn may be different.
The finance ministry said a revenue shortfall, higher capital expenditure, higher interest payments and public sector wage escalations had helped expand the deficit.
Inflation in February 2010
The annual average inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2002=100), computed by the Department of Census and Statistics, stabilized at 3.1 per cent in February, 2010. However, on a point-to-point basis, inflation increased to 6.9 per cent as anticipated,
reflecting mainly the lower base in the corresponding month of 2009.
The general price level as indicated by the monthly index recorded an increase of 0.2 per cent in February, 2010 over the previous month, with the Index increasing in absolute terms from 216.4 to 216.9. The contribution to the monthly increase in the Index originated mainly from price increases in the sub categories of Health (4.3 per cent) and Education (2.3 per cent). Food and non-alcoholic beverages sub category, which accounts for 46.7 per cent of the CCPI item basket, remained unchanged during the month. Further, price increases in the sub categories of Miscellaneous goods and services (0.2 per cent); and Furnishing, household equipment and routine household maintenance (0.1 per cent); also contributed to the increase in the index. However, prices in the Clothing and footwear (-0.4 per cent); Transport (-0.2 per cent); and Housing,
water, electricity, gas and other fuels (-0.1 per cent) sub categories registered declines compared to the last month.