Sri Lanka's economy needs urgent reforms: Finance Minister

Colombo, Nov 20: The Sri Lankan government today unveiled the 2016 budget with tax cuts aimed at attracting foreign investment, saying the country needed urgent reforms as it blamed the previous regime for excessive borrowings.

"If the economy goes without reforms there will be high unemployment and falling income", Finance Minister Ravi Karunanayake said.

He blamed infrastructure projects started by former president Mahinda Rajapaksa for not yielding returns as they were badly planned.

The current government headed by Rajapaksa's successor President Maithripala Sirisena has a long term strategy to boost the economy, Karunanayake said. He said the budget deficit for 2016 will be Rs 740 billion or 5.9 per cent of GDP.

Capital spending is planned at Rs 868 billion up from Rs 517 billion in 2015. Karunanayake announced tax cuts and price reductions of consumables. He also lifted tax on lands leased to foreigners.

"Impediments to foreign investors to get land in the country will be relaxed," Karunanayake said.

The Rajapaksa government had blocked foreign ownership of lands.

Karunanayake said foreigners will be allowed to bring in money to any local bank lifting the existing requirement for special investment accounts, adding that the budget proposals are to allow imports of gold tax free and 50 licenses are to be issued.

PTI