President said it is not easy to increase wages

This is Sri Lanka's first full-year budget since its long civil war ended in 2009, and its set out reforms to the nation's fiscal and monetary frameworks.

The government has trimmed its budget deficit to 6.8 percent, a main goal under $2.6 billion International Monetary Fund (IMF) loan programme. The IMF wanted Sri Lanka to trim its budget gap to 5 percent by the end of 2011.The total expenditure for 2011 is estimated to be over 1420 billion rupees while estimated income is only 986 billion.

President presenting the 2011 Budget said his government hopes to increase the per capita income of Sri Lanka to US$ 4,000 by year 2016.

No Rs 2500 to public sector

The public sector is given an interim allowance of 5% and increase of Rs 600 cost of living allowance, which is far below the Rs 8000 trade unions and Opposition parties have been demanding. The opposition parties called on the government to increase the salaries of the public sector employees by Rs. 8,000 and a similar increase in salaries for the private sector employees stating the high cost living. The Trade unions had already launched protest campaigns demanding the increment.

During the run up to the presidential elections in January, the Opposition candidate now jailed former Army Commander Sarath Fonseka pledged a 10,000-rupee salary hike to Public sector workers while President Rajapaksa said he was only able to grant Rs. 2,500 as it is realistic. But he has failed to deliver the promised increase in this budget.

President Rajapaksa also announced that government will allocate Rs 3000 Million for the welfare of the disable soldiers while also proposed Rs. 100,000 grant to every 3rd child born to a Soldiers family.

Tax reforms

Import taxes, tax on financial services and companies engage in export businesses were changed considerably to facilitate the trade and investment.

Import taxes on medicine and some capital goods were slashed and car tax was reduced by a quarter. Tax on tourism earnings and income tax on export companies will be trimmed by the new proposals.

Tax brakes were offered to the fisheries, agriculture and construction sector, a policy that aimed at boosting the economic activities in Sri Lanka.

Liberalising the foreign exchange regulations, foreigners would in future be able to buy into local unit trusts and such investments will be exempted from foreign exchange control restrictions.

Taxes on casinos, alcohol, share trading and phone calls were raised and the budget proposed to recruit 10000 graduates to the public services

8% economic growth

The President hoped that the economy would achieve eight percent growth next year.

The main opposition UNP commenting the budget says it's an eye wash and it has not given any relief to the general public who are highly affected by the current high cost of living. They pointed out President has failed to fulfill the promise he pledged during his election campaign which is the salary hike of Public Sector of Rs 2500.00.