President predicts a 7.5 economic growth in 2008

Provisional figures presented in parliament earlier showed that defence spending for 2008 would total 166.44 billion rupees up from an estimated 139.4 billion rupees in 2007.

Budget speech in full

President Mahinda Rajapaksa, said the budget deficit would narrow to 7.0 percent of GDP and said that the government has maintained 7% economic growth.

Economic growth

He predicted a 7.5 percent economic growth in 2008.

President Rajapakse said that the government servants will be given a cost of living allowance of Rs. 2500 from January and it will be increased to Rs. 2875 from June.

There could be no political solution until terrorism is wiped out completely President Rajapaksa

The president said that there will be a temporary hold on the petrol and diesel prices despite the increased world market price.

Additional 2.5 percent levy on motor vehicles and higher tax on imports of non-essential goods were also announced.

New tax proposals

Govt. also proposes to levy a 10 percent tax on calls made on GSM mobile phones to other wireless telephones and also to raise the licence fee for telecom service providers.

A proposal to tax Rs.20 from every household with vehicle and phones was also announced as a new environment conservation tax.

The president said 15,000 employment opportunities will be created for the unemployed youth within the coming year.

In his budget speech, the president said that the attack on the Anuradhapura Air Base has demonstrated that the LTTE is not interested in a negotiated settlement.

"There could be no political solution until terrorism is wiped out completely", he said.

President concluded the 2008 budget speech by inviting the main opposition to join hands with the government in the best interest of the country.