World - Sri Lanka hikes defence budget to record $ 1.6bn

Colombo, Nov 6 (PTI) Sri lanka today hiked its defence budget by a whopping seven per cent to a record USD 1.6 billion to fund the ongoing military operations against Tiger rebels, even as it asked the LTTE to surrender or face defeat. In a speech to the Parliament, President Mahinda Rajapaksa announced plans to raise defence spending by seven per cent to a record figure of USD 1.6 billion in 2009.

He also announced a one per cent tax on most goods and services to "rebuild communities and infrastructure facilities affected by terrorism," while downgrading the economic growth of the country reeling under a double-digit inflation. "My earnest plea to the terrorists is to lay down arms and join the democratic process, even at this last moment.

If not, they would be militarily defeated," said Rajapaksa in his Budget Speech to Parliament today. Rajapaksa devalued the growth rate for 2008 by 0.5 per cent to 6.5 per cent for the economy which grew by 6.8 per cent in 2007.