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Sri Lanka - Defense Budget

The Defence budget remained high in 2016, but the allocation for education was increased four-fold. The defence allocation is more than Rs. 306 billion. According to the 2016 Appropriations Bill, more than Rs. 257.6 billion of the money allocated to the Defence Ministry went for recurrent expenditures, while capital expenditure were around Rs. 48.9 billion. The total allocation made to the Ministry of Defence for 2015 when it was amalgamated with the Ministry of Urban Development was around Rs. 285 billion. In 2016, however, the Defence Ministry alone got around Rs. 306 billion, of which close to 85 percent wase spent on operations activities of the Ministry, the Sri Lanka Army, the Navy, the Air Force, the Department of Civil Security and the Coast Guard Department.

The intervention of the Indian Peacekeeping Force in 1987 permitted the Sri Lankan government to decrease its defense outlays for the first time in ten years. Since the United National Party came to power in 1977, Colombo's efforts to quell the Tamil insurgency and the radical Sinhalese movement in the south had demanded an increasing share of the nation's resources; in the early 1980s, defense expenditures represented only 1 percent of the gross domestic product (GDP).

By 1986 this figure had risen to 3.5 percent, and by 1987 it was estimated at over 5 percent. After a number of supplemental appropriations, 1987 defense costs were estimated at Rs10.6 billion, including Rs3.5 billion for the army, Rs1.3 billion for the navy, Rs1.9 billion for the air force, and Rs1.7 billion for the police. The dramatic growth in defense outlays took place at a time when Sri Lanka's major exports were realizing significantly lower prices on the international market and in 1986, for the first time, the government was forced to resort to large-scale commercial borrowing.

A continuation of this trend promised to undermine the government's development efforts and aggravate an already sizable trade deficit. After the arrival of Indian troops in July 1987, the Sri Lankan government withdrew most of its forces from Northern and Eastern provinces, saving significantly on operational costs. As a result, Sri Lanka projected a 37 percent cut in army expenditures and a total military budget of Rs9.2 billion, 13 percent below 1987 levels.

In October 2009 the government submitted a supplementary defense budget request for 33.8 billion rupees (approximately $296 million USD), with the lion,s share allocated to the army. The army will receive 19.6 billion rupees ($172 million), the navy gets 7.3 billion rupees ($64 million), the air force obtains 2.9 billion rupees ($25 million), civil security gains 1.6 billion rupees ($14 million), and the Ministry of Defense collects 570 million rupees ($5 million). The 2009 defense budget was 177 billion rupees, so the supplementary budget increases defense spending by 15 percent.

The Goverment's budget suffered from the high cost of fighting the war. Expensive purchases of war-related equipment and ammunition, often on longer term contracts and using up valuable foreign reserves, coupled with a drop in exports due to the global economic downturn, pushed Sri Lanka to request a $2.6 billion stand-by arrangement from the IMF in early 2009 which was approved in July.

Defense spending was 3.8 percent of GDP in 2009 but fell to 3.5 percent in 2010 and remained under the projected budget ceiling. Defense spending with the supplemental would be approximately 4.3 percent of GDP in 2009. The military was engaged in many non-military functions in the north, such as police work and reconstruction, which would be taken over by civilian authorities. Over 70 percent of military expenses were for salaries. The military had also canceled some of its arms procurement orders once the war ended.

Much of the defense-budget increase was meant for obligations from past purchase contracts. The government had MOD a one-year grace period, but now payments had to be made and would continue in some cases until 2020. The government also had to pay survivors' compensation to families who had lost soldiers in the fighting and compensation to veterans who had been severely wounded and medically boarded out of the military. The military also had to pay substantial recurring costs for rations and fuel.

As of 2009 the military was on record with proposals for a net increase of approximately 25,000 troops, as well as the construction of new bases in the north in previously occupied LTTE territory.





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