Implications of Sri Lanka's Defense Expenditure in the 2007 Budget
by K Balakrishnan, Economic Analyst, LTTE Peace Secretariat, November 21, 2006
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The Sri Lankan government clearly has a need to convince the donors of its intentions to pursue the peace process, to convince them of the necessity for the extensive borrowing and aid needed to make up the budget shortfall, as shown above. In order to do this, the Sri Lankan government will posture as the party interested in peace. Will the donors be deceived?
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Defense expenditure allocated in the 2007 Sri Lankan budget is 139.66 billion Rupees, which is 1.4 billion US dollars.
This is a 46% increase on the 2006 defense spending. The government has said that this is mostly due to increases in salary.
The 2007 defense allocation is 23.28%of the total government income.
Of the total government expenditure for 2007, this is 16.72%.
The budget shortfall for 2007 is estimated to be 235 billion Rupees. The table below shows how the Sri Lankan government is planning to make up for the shortfall.
| The proposed deficit is to be made as follows |
| Item |
Amount in billion Rupees |
Amount in billion US dollars |
| Foreign borrowings |
114.789 |
1.15 |
| Foreign grants |
24.075 |
0.25 |
| Internal borrowing (non banking sectors) |
139.512 |
1.39 |
| Internal borrowing (banking sector) |
8.00 |
.08 |
| Foreign currency domestic borrowings |
8.70 |
.087 |
| Total |
295.076 |
2.95 |
| After paying overseas loan repayment |
60.038 |
.6 |
| Rest that will make up the budget shortfall |
235.038 |
2.35 |
The Sri Lankan government clearly has a need to convince the donors of its intentions to pursue the peace process, to convince them of the necessity for the extensive borrowing and aid needed to make up the shortfall as shown above. In order to do this, the Sri Lankan government will posture as the party interested in peace. Will the donors be deceived?
The table below shows how the Rajapakse government has made a three-fold increase in the estimated expenditure for purchasing military hardware for 2007.
| Estimated capital expenditure for purchasing military equipment for 2007 in US dollars |
| by the regime previous to the Rajapakse regime |
14.962 |
| by Rajapakse regime |
44.896 |
The table below is a comparison of the defense expenditure of several countries.
| Country* |
Defense expenditure as a percentage of the nation’s GDP |
Defense expenditure per year per person in US dollars ** |
Number of citizens for each soldier |
| Japan |
1.0 |
- |
533 |
| Germany |
1.5 |
- |
250 |
| Norway |
2.0 |
- |
173 |
| UK |
2.4 |
- |
280 |
| France |
2.6 |
- |
236 |
| India |
2.6 |
14.00 |
820 |
| USA |
3.7 |
- |
203 |
| China |
3.9 |
43.00 |
580 |
| Sri Lanka |
4.3 |
71.00 |
130 |
| Pakistan |
4.5 |
20.00 |
251 |
| Bangladesh |
1.2 |
4.60 |
1109 |
| Average |
2.7 |
- |
305 |
* The data for other countries are based on 2003 spending. The Sri Lanka data is for the 2007 budget.
** Comparison of this data is valid only for countries with similar economic development. Therefore, only countries in the South Asian region are compared.
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