The Ceylon National Chamber of Industries (CNCI) welcomes the vision 2001 statement in the budget, a press release said.

It is also conscious of the current economic hardship in which the country is placed. "We pledge our unstinted cooperation to the Government to help it to steer the country away from the current crises and towards the stated vision". We view the budget in this perspective and make the following observations and suggestions, it said.

The budget does provide positive proposals to assist businesses in Sri Lanka. Some of these are duty reduction on raw materials, encouragement for relocation and expansion, simplified EPF/ETF contribution, proposal for an enterprise Development Bank, rationalisation of holidays, incentives for infrastructure development and incentives for specific sectors such as IT, handloom, powerlooms and the apparel industry.

"The budget deficit of 8.5% and inflation of 9.5% are of great concern to us". In the recent past the actual budget deficit has been 25 to 30% higher than what was budgeted. If the trend is permitted to repeat itself this year too, the budget deficit will be a matter of great concern.

Adverse Balance of Payment during the last two years has been very high and the effects it has had is evident to every one. A surplus of US $140m is being budgeted for this year on the basis that the growth momentum of exports will continue. Also a lower international price of US $25 per barrel of crude oil is expected, together with reduced expenditure on defence imports, net inflows in the stock market and expected capital inflows of Us $275m. Some of these factors are beyond the control of the government and in the case of others, it is relevant to note as to what has been the immediate past record. Therefore, the probability of all these factors being as expected, cannot be taken for granted. Thus, alternates and standby arrangements we do hope are being attended to.

Further borrowings, both external and domestic, seem unavoidable. Thus, with depleted reserves and high borrowing which are already a burden, to service a further aggravation will nullify the high objectives the government has set itself.

Even at the business levels, increased working capital requirements following higher inflation are going to be hard to come by and will be costly by way of higher interest rates. Recent increases in energy and other utility costs have pushed up the cost of production. Business failures are bound to increase.

This is more so for the competitiveness of businesses in neighbouring countries are being improved by bold and radical policies. In this environment, if the country is to keep pace globally, similar steps are a prerequisite.

Radical restructuring of the expenditure to shift the focus away from unproductive sectors towards productive expenditure is the immediate need. The intention has been signalled by the ten steps proposed in Expenditure Control and Management. This includes the closure of 35 redundant public entities which is a welcome step. "We suggest that this should not only be expedited but more such entities be closed and the funds released towards infrastructure development.

In conclusion we wish to emphasize the need for close monitoring and management of vital elements of the budget proposals. We suggest a small panel of experts of economists, entrepreneurs and administrators be formed. This panel could meet monthly along with a few Senior Cabinet Ministers of Development Ministries under the Chairmanship of the President or the Prime Minister, to monitor and manage the revenue and expenditure towards productive sectors.